JULIE M. ZISSIMOPOULOS, The RAND Corporation
Email: ziss@rand.org
BENJAMIN KARNEY, RAND Corporation
Email: bkarney@rand.org
AMY RAUER, Auburn University
Email: arauer@rand.org

Compared to unmarried individuals married individuals report greater average wealth. A restricted focus on current marital status risks misrepresenting the effects of marriage on wealth, as an increasing proportion of older adults have been divorced and remarried, having lived through the dramatic upheavals in family structure from the 1960s through the 1980s. To shed light on the associations between a lifetime of marriage events and wealth near retirement, we used panel data from the Health and Retirement Study and developed categories of marital experiences that acknowledged current status, type, number and date of past marital disruptions and total duration of time spent married across the lifespan. We found that the route individuals took to get to their current marital status were important predictors of wealth levels near retirement and were different for males and females. Observable differences in lifetime earnings, mortality risk, risk aversion, other characteristics such as education and number of children, explained much of the wealth difference between married and remarried individuals however neither observable characteristics nor sources of other wealth from pensions and Social Security were enough to explain the large differences in wealth accumulation between single and married women and individuals experiencing more than one marital disruption. Given the higher divorce rate, prevalence of multiple divorces and earlier age of divorce of the Baby Boomer cohort compared to earlier cohorts, an understanding of how marriage disruptions over the lifecycle impact savings is increasingly important for understanding the economic security of retirees.

TRACY FALBA, Duke University - School of Law
Email: tracy.falba@duke.edu
BILL GALLO, Yale University
Email: william.gallo@yale.edu
JODY L. SINDELAR, Yale University - School of Public Health, National Bureau of Economic Research (NBER)
Email: jody.sindelar@yale.edu

We explore the impact on depressive symptoms of deviation in actual labor force behavior at age 62 from earlier expectations. Our sample of 4,241 observations is drawn from the Health and Retirement Study (HRS). We examine workers who were less than 62 years of age at the 1992 HRS baseline, and who had reached age 62 by our study endpoint, enabling comparison of actual labor force withdrawal with earlier expectations. Poisson regression were used to estimate the impact of expected full-time work status on depressive symptoms; regressions are estimated separately for those working fulltime at age 62 and those not working fulltime. We found significant effects on depression at age 62 both for full-time workers who expected not to be working full-time, and for participants not working full-time who expected to be doing so. These results hold even after adjustment for earlier depressive symptoms, sociodemographic and other relevant controls. The findings suggest that working longer and retiring earlier than expected each may compromise psychological well-being. The current financial crisis may result in both scenarios as some workers may have to work longer than expected due to the decline in pension and other wealth while others may retire earlier due to job loss.

RUTH HELMAN, Mathew Greenwald & Associates
Email: RUTHHELMAN@GREENWALDRESEARCH.COM
PAUL FRONSTIN, Employee Benefit Research Institute (EBRI)
Email: FRONSTIN@EBRI.ORG

This paper presents findings from the 2008 Health Confidence Survey (HCS), the 11th wave of an annual survey to assess the attitudes of the American public regarding the health care system in the United States. Findings from the 2008 Health Confidence Survey (HCS) continue to demonstrate that rising health care costs are connected to changes in the way that Americans are using the health care system. However, the long-term consequences of these changes remain to be seen, as some changes are positive but others could have a negative outcome. Perhaps largely because of their experience with rising health care costs, Americans continue to view the country's overall health care system negatively, feeling it needs a major or even a complete overhaul. They believe reform needs to balance multiple goals, including making health care more affordable and providing high-quality health care. Many are willing to support changes to make sure more Americans have access to health insurance coverage.

The findings from the 2008 HCS, while in large part consistent with findings from previous years, are significant in that they come at a time when health care costs are continuing to rise, the economy is slowing, the housing market is in crisis, and food and energy price inflation is creeping up. The HCS is co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public policy research organization, and Mathew Greenwald & Associates, Inc., a Washington, D.C.-based market research firm.

DAVID A. LOVE, Williams College - Department of Economics
Email: dlove@williams.edu
PAUL A. SMITH, Federal Reserve Board of Governors
Email: paul.a.smith@frb.gov

Defined benefit (DB) pension freezes in large healthy firms such as Verizon and IBM, as well as terminations of plans in the struggling steel and airline industries, highlight the fact that these traditional pensions cannot be viewed as risk-free promises from the employee's perspective. Indeed, the current turmoil in financial markets and difficult economic outlook for many firms suggest that many more pension plans could be frozen soon. In this preliminary paper we develop an empirical dynamic programming framework to investigate household saving decisions in a model economy with freeze-prone DB pensions. The model incorporates important sources of uncertainty facing households, including asset returns, employment, income, and mortality, as well as pension freezes. Applying a compensating variation measure of welfare, we find that pension freezes reduce welfare by a maximum of about \$6,000 for individuals with a high school degree and about \$2,000 for individuals with a college degree. We close by highlighting a few important issues that are missing from our preliminary analysis, including a labor supply decision and the effects of market-clearing conditions in the labor market. We hope to address these issues in future work.

JOEL T. HARPER, Oklahoma State University - Stillwater - Department of Finance
Email: joel.harper@okstate.edu

Growing interest in public sector pension plans is rooted in the common stake all citizens have in the cost, operation, performance and viability of these plans. In addition to these public finance issues, the management and oversight of public pension plans provides an interesting study in the effectiveness of Board structures in guiding and monitoring plan operations because of the representative and open nature of these plans. This article reviews Board of Trustee structures prevalent in public sector pension plans in the United States, and investigates whether the type of Board structure impacts investment and funding policy decisions. The sample includes plans that range in size, scope and type of public sponsor, and does not rely upon preexisting databases or voluntary participation in surveys. As such, this article presents a broad view of plan Trustees, avoiding the problems of self-selection inherent in survey studies. The results point to two important conclusions. First, no direct relationship could be established between Board composition and characteristics, and investment returns. Second, some Board characteristics appear to affect funding levels, a broader measure of plan performance.

GAOBO PANG, Watson Wyatt Worldwide
Email: Gaobo.Pang@watsonwyatt.com
MARK J. WARSHAWSKY, Watson Wyatt Worldwide
Email: mark.warshawsky@watsonwyatt.com

We compare several strategies for individual wealth management in retirement, focusing on investment performance and trade-offs between wealth creation and income security. Systematic withdrawals from mutual funds generally give opportunities for greater wealth creation but this strategy also entails large probabilities of investment losses and volatile income flows. Variable immediate annuities likely distribute higher incomes than the systematic withdrawals but lack the income security featured in fixed payout life annuities. Fixed life annuities and variable annuities with guaranteed minimum withdrawal benefit (VA GMWB) offer considerable income stability. A mix of mutual funds and fixed-payout life annuities may serve both wealth growth and certain degree of income protection, similar but not identical to a VA GMWB strategy. Wealth and income in the various strategies also differ significantly owing to differing levels of fees.