20 Matching Annotations
  1. May 2021
    1. We want some competition across creativity to drive innovation but not too much where it has us stop investing altogether.

  2. Dec 2020
    1. If the resource constraint is met, individuals choose to retire once the net benefits of retirement (e.g., leisure time) exceed the net benefits of working (labor income less the costs associated with working). From this model, we can predict that anything that increases the costs associated with working, such as advancing age, an illness, or a disability, will increase the probability of retirement. Similarly, an increase in pension income increases the probability of retirement in two ways. First, an increase in pension income makes it more likely the resource constraint will be satisfied. In addition, higher pension income makes it possible to enjoy more leisure in retirement, thereby increasing the net benefits of retirement.

      i do not fully agree with this second statement. just because you have a high pension plan does not necessarily mean that you will have more happiness or more out of your "leisure" time.

    2. in the nineteenth century men typically used the promise of a bequest as an incentive for children to help their parents in old age. As more opportunities for work off the farm became available, children left home and defaulted on the implicit promise to care for retired parents. Children became an unreliable source of old age support, so parents stopped relying on children — had fewer babies — and began saving (in bank accounts) for retirement.

      Oh wow. That sounds pretty rude but also reasonable. Children can become opportunists in the future.

    3. The retirement pattern we see today, typically involving decades of self-financed leisure, developed gradually over the last century. Economic historians have shown that rising labor market and pension income largely explain the dramatic rise of retirement. Rather than being pushed out of the labor force because of increasing obsolescence, older men have increasingly chosen to use their rising income to finance an earlier exit from the labor force. In addition to rising income, the decline of agriculture, advances in health, and the declining cost of leisure have contributed to the popularity of retirement. Rising income has also provided the young with a new strategy for planning for old age and retirement. Instead of being dependent on children in retirement, men today save for their own, more independent, retirement.

      We as a race have wanted to become more self-sufficient and work hard to shorten the rat race to retirement.

    4. Recently, 401(k) plans have become a popular type of pension plan, particularly in the service industries. These plans typically involve voluntary employee contributions that are tax deductible to the employee, employer matching of these contributions, and more choice as far as how the pension is invested.

      LOL "recently" in the 1990s is when 401Ks became popular

    5. Over the last thirty years, the type of pension plan that firms offer employees has shifted from ‘defined benefit’ to ‘defined contribution’ plans. Defined benefit plans, like Social Security, specify the amount of benefits the retiree will receive. Defined contribution plans, on the other hand, specify only how much the employer will contribute to the plan. Actual benefits then depend on the performance of the pension investments. The switch from defined benefit to defined contribution plans therefore shifts the risk of poor investment performance from the employer to the employee.

      This seems sneaky but makes sense from the business's perspective. They are willing to help but it is a more individualized approach to the employee who's responsible for determining where to invest their pension planning funds.

    6. Even in the shadow of the Social Security system, employer-provided pensions continued to grow. The Wage and Salary Act of 1942 froze wages in an attempt to contain wartime inflation. In order to attract employees in a tight labor market, firms increasingly offered generous pensions. Providing pensions had the additional benefit that the firm’s contributions were tax deductible. Therefore, pensions provided firms with a convenient tax shelter from high wartime tax rates. From 1940 to 1960, the number of people covered by private pensions increased from 3.7 million to 23 million, or to nearly 30 percent of the labor force.

      With the wartime of [[WWII]] there was a money freeze to stop inflation. Companies stared to give private pensions and this increased drastically from 1940 to 1960.

      Employers used high pensions as an incentive to work for them. It's kind of like high risk now and for a long time for a large reward later. Businesses were also incentivized because they received a tax shield from the government while giving away pension money.

    7. the lengthy service requirement and mandatory retirement provision, firms viewed pensions as a way to reduce labor turnover and as a more humane way to remove older, less productive employees. In addition, the 1926 Revenue Act excluded from current taxation all income earned in pension trusts. This tax advantage provided additional incentive for firms to provide pensions. By 1930, a majority of large firms had adopted pension plans, covering about 20 percent of all industrial workers.

      Pension programs were starting to become enforced by the gov't in partner wit realizing there are tax incentives.

      Employer saw pensions plans as a way to reduce turnover of labor, a humane way to remove elderly talent and less productive (less personal)

    8. By the early twentieth century, state and municipal governments also began paying pensions to their employees. Most major cities provided pensions for their firemen and police officers. By 1916, 33 states had passed retirement provisions for teachers. In addition, some states provided limited pensions to poor elderly residents. By 1934, 28 states had established these pension programs

      Interesting that these pensions programs were provided first for Vets, then police, firemen and teachers. Are these the most important jobs yet still not paid well?

      Is it because they have the most government control over them?

    9. The Union Army pension program expanded greatly as a result of the Pension Act of 1890. As a result of this law, pensions were available for all veterans age 65 and over who had served more than 90 days and were honorably discharged, regardless of current employment status. In 1900, about 20 percent of all white men age 55 and over received a Union Army pension. The Union Army pension was generous even by today’s standards. Costa (1995b) finds that the average pension replaced about 30 percent of the income of a laborer. At its peak of nearly one million pensioners in 1902, the program consumed about 30 percent of the federal budget.

      Wow maybe the US were too generous with 30% of budget being to support past veterans. At the same time it makes sense in the 1900s since that was a large role that people had was in protecting the country with Wars going on.

      Our values as a country have shifted since this program no long consumes 30% of the federal budget.

    10. In the U.S., public (government-provided) pensions originated with the military pensions that have been available to disabled veterans and widows since the colonial era. Military pensions became available to a large proportion of Americans after the Civil War, when the federal government provided pensions to Union Army widows and veterans disabled in the war.

      I'm glad to see that our country cares enough.

    11. Rising income also provided the young with a new strategy for planning for old age and retirement.

      With having excess funding it allowed for a time for financial literacy and planning of wealth management.

    12. Empirically, age, disability, and pension income have all been shown to increase the probability that an individual is retired. In the context of the individual model, we can use this observation to explain the overall rise of retirement. Disability, for example, has been shown to increase the probability of retirement, both today and especially in the past. However, it is unlikely that the rise of retirement was caused by increases in disability rates — advances in health have made the overall population much healthier.

      If age, pension and disability are higher --> more likely to retire.

      Even for my roommate [[Kate Cirone]] who is not old or have a pension, she has a disability which has caused her a mild relapse of seemingly retirement / sabbatical (not really though).

    13. older black men were much more likely to be working than older white men. In 1900, for example, 84.1 percent of black men age 65 and over and 64.4 percent of white men were in the labor force. The racial retirement gap remained at about twenty percentage points until 1920, then narrowed dramatically by 1950. After 1950, the racial retirement gap reversed. In recent decades older black men have been slightly less likely to be in the labor force than older white men

      This is interesting. So Blacks used to drastically work up until they were older and now it is reversed.

    14. Goldin (1990) concludes that “even as late as 1940, most young working women exited the labor force on marriage, and only a small minority would return.” The employment of married women accelerated after World War II, and recent evidence suggests that the retirement behavior of men and women is now very similar. Gendell (1998) finds that the average age at exit from the labor force in the U.S. was virtually identical for men and women from 1965 to 1995.

      There used to be changes in when women stopped working upon marriage but now it is about the same age. It makes sense because I imagine you'd want to retire with your partner.

    15. trends in the labor force participation of older men, discusses the decision to retire, and examines the causes of the rise of retirement including the role of pensions and government programs.

      Thesis for this research paper

    16. the nature of retirement appears to have changed. In the late nineteenth century, many retirements involved a few years of dependence on children at the end of life. Today, retirement is typically an extended period of self-financed independence and leisure.

      Hmmm why can't we have self-financed independence and leisure before we are about to die. I am glad that this shift occurred though still maybe it isn't allocated at the right stage of life?

      I fear that there is a whole new segway of people lie mom who have the full-time job of caring for elderly folk since they are living so much longer. It becomes a nuisance for those children in their mid-life and then they expect the same of their children. Kind of a quid proquo.

    17. How can we explain the rise of retirement? Certainly, the development of government programs like Social Security has made retirement more feasible for many people. However, about half of the total decline in the labor force participation of older men from 1880 to 1990 occurred before the first Social Security payments were made in 1940. Therefore, factors other than the Social Security program have influenced the rise of retirement.

      Interesting that people started to retire before Social Security programs were in place.

    18. When coupled with the increase in life expectancy over this period, it is clear that men today can expect to spend a much larger proportion of their lives in retirement, relative to men living a century ago.

      Does this even mean that we are happier spending more time in retirement? Don't we have an internal drive and desire to want to be adding value to the world as a citizen?

    19. Moen (1987) and Costa (1998) estimate that the labor force participation rate of men age 65 and older declined from 78 percent in 1880 to less than 20 percent in 1990

      I cannot believe that almost 4 fifths of the population of men still work past the age of 65?!

      The life longevity that we live has increased as well so back in the 1880s and beyond the lifespans were shorter.

      What is the motivating factors here for them to keep working apart from money? I feel like guys in investment banking keep chugging along because they know that they can race to retirement.