KIMBERLY D. BURHAM, U.S. Social Security Administration - Office of Research, Evaluation and Statistics
Email: kimberly.burham@ssa.gov

This chartbook examines the spending patterns of the aged population (65 or older) using data from the 2002 Consumer Expenditure Survey Public-Use File. The charts compare expenditures of the aged population with those of the near aged (55-64). Many charts also compare those aged 65-75 and 75 or older. The data include total and per capita expenditures and expenditures for housing, food, health care, transportation, and travel.

KENNETH J. MCDONNELL, Employee Benefit Research Institute (EBRI)
Email: MCDONNELL@EBRI.ORG

This paper looks at one slice of the income pie of the older population: retirement annuities and employment-based pensions. It analyzes the population of those age 50 and over in order to take into account the prevalence of early retirement options available to individuals beginning at age 50. Recent data from the March 2007 Current Population Survey, conducted by the U.S. Census Bureau, confirm earlier findings that gender, marital status, age, education, and other demographic variables have a significant impact on the likelihood of a worker receiving a retirement annuity and/or employment-based pension income in retirement. There may also be a strong correlation between these same variables and the amount of pension income received from public- and/or private-sector employment-based retirement plans.

The PDF for the above title, published in the January 2008 issue of EBRI Notes, also contains the fulltext of another January 2008 EBRI Notes article abstracted on SSRN: Finances of Employee Benefits, 1950-2006.

ALBERT FEUER, Law Offices of Albert Feuer
Email: afeuer@aya.yale.edu

This Article argues that a beneficiary designation made by a participant pursuant to the terms of an ERISA plan determines who is entitled to survivor benefits from that plan. Such designation may not be superseded by

(A) an agreement made in a marital dissolution or separation whereby a participant promises to make or retain a different designation (such agreements are not qualified domestic relations orders, "QDROs," because QDROs are limited to orders directed not at participants but at ERISA plans);

(B) an agreement made in a marital dissolution or separation whereby a participant's former or separated spouse "relinquishes" any interest in the participant's ERISA plan benefits; or

(C) a state law or federal common-law principle whereby killers of a participant are deprived of the entitlement to the participant's survivor benefits from an ERISA plan.

ERISA pension plans must incorporate the only two ERISA required beneficiary designations, QDROs and spousal survivor benefit designations. Neither statutory designation applies to an ERISA plan that is not a pension plan, such as a life insurance or disability plan. Thus, neither statutory designation may supersede a beneficiary designation made pursuant to the explicit terms of an ERISA life insurance or disability plan.

ERISA voids both (A) a direct benefit claim against an ERISA plan that is not based on a designation that was made pursuant to the terms of the plan, and (B) an indirect benefit claim against the recipient of plan benefits that is not based on a designation that was made pursuant to the terms of the plan.

KENNETH J. MCDONNELL, Employee Benefit Research Institute (EBRI)
Email: MCDONNELL@EBRI.ORG

Financing of the U.S. employee benefit system is a joint effort by employers and employees. Both employers and employees make payments to voluntary employee benefit programs that provide health insurance coverage, retirement benefits, and other benefits. In addition, employers and employees make payments to mandatory government social insurance programs - most notably Social Security and Medicare - which provide retirement income and health care coverage, respectively, for elderly and disabled workers and their dependents. Whether voluntary or mandatory, each of these systems is employment-based and financed primarily from earmarked employment-based contributions by the employer and/or the workers. This paper uses the latest data (for 2006) from the Bureau of Economic Analysis' (BEA) National Income and Product Accounts of the United States. A key finding is that retirement benefits are still the top source of benefit expenditures among both public and private employers, but that health benefits are catching up fast and are likely to outstrip retirement as the major benefit expense.

The PDF for the above title, published in the January 2008 issue of EBRI Notes, also contains the fulltext of another January 2008 EBRI Notes article abstracted on SSRN: Retirement Annuity and Employment-Based Pension Income, Among Individuals Age 50 and Over: 2006.

MOTOHIRO YOGO, University of Pennsylvania - Finance Department, National Bureau of Economic Research
Email: yogo@wharton.upenn.edu

This paper develops a consumption and portfolio-choice model of a retiree who allocates wealth among four assets: a riskless bond, a risky asset, a real annuity, and housing. Unlike previous studies that treat health expenditures as exogenous negative income shocks, this paper builds on the Grossman model to endogenize health expenditures as investments in health. I calibrate the model to explain the joint evolution of health status and the composition of wealth for retirees, aged 65 to 96, in the Health and Retirement Study. I use the calibrated model to assess the welfare gains of an actuarially fair annuity market. The welfare gain is less than 1% of wealth for the median-health retiree at age 65, and the welfare gain is about 10% of wealth for the healthiest.

RICHARD L. KAPLAN, University of Illinois College of Law
Email: RKAPLAN@LAW.UIUC.EDU

Few federal programs are as well known and as widely misunderstood as Social Security, despite its national prominence in matters both political and economic. As efforts to reform this creation of the Great Depression era are likely in the coming years, this article examines the principal myths surrounding this program to set the stage for evaluating possible revisions. The myths considered in this article include the following: (1) there is a trust fund, (2) Social Security does not increase the federal budget deficit; (3) retirees are only recovering their own money, (4) Social Security will not be there when one retires, (5) retirement benefits are proportional to one's lifetime earnings, (6) Social Security favors two-income married couples, (7) Social Security favors long-lived marriages, (8) one could do better investing directly, (9) working after retirement makes financial sense, and (10) retirement benefits are taxed more heavily than other pension payments.

ROBERT L. BROWN, Affiliation Unknown

This paper looks at potential models of social security pension systems. It refers often to the systems that exist in the United States and Canada (the latter more particularly) to outline the issues involved in attempting to design a good social security pension system. Of course, one of the issues is the definition of good. This paper will use criteria such as poverty alleviation, retirement income adequacy, benefit/contribution sustainability, income equality and wealth distribution. In the course of the discussion, the reader will be exposed to many issues that need to be addressed in the establishment of any social security pension system in the world. This may prove to be helpful in countries where new systems are established (and even for evolving systems). It is also hoped that future students of social security will find this paper helpful in that it is meant to lay out some basic principles consistent with good social security pension design.

JONATHAN BARRY FORMAN, University of Oklahoma College of Law
Email: JFORMAN@OU.EDU

The government can, and should, intervene in the free market to reduce inequality in the distribution of wealth. We simply do not have to settle for a society where the top 5 percent of households have dozens of times as much income as the bottom 20 percent and hundreds of times as much wealth. We should combine the individual income tax and the Social Security payroll tax into a single, comprehensive income tax system with a broad base and low tax rates on earned income. We should also keep the current estate tax or, alternatively, replace it with an annual wealth tax. Even a modest annual wealth tax could raise $50 billion a year.

CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG

This paper examines recent U.S. Census Bureau data on labor-force participation among Americans age 55 and older. The first section uses annualized data on labor-force participation from the Current Population Survey (available from the Bureau of Labor Statistics Web site). However, these data provide only an overall picture, not specific demographic details. In order to examine demographic trends of the U.S. population, the second section uses data from the March Current Population Survey.

The PDF for the above title, published in the June 2007 issue of EBRI Notes, also contains the fulltext of another June 2007 EBRI Notes article abstracted on SSRN: "Tax Expenditures and Employee Benefits: Estimates from the FY 2008 Budget."