Mitchell, Olivia S
Email Address
ORCID
Disciplines
3 results
Search Results
Now showing 1 - 3 of 3
Publication How Family Status and Social Security Claiming Options Shape Optimal Life Cycle Portfolios(2013-10-01) Hubener, Andreas; Maurer, Raimond; Mitchell, Olivia SHousehold decisions are profoundly shaped by a complex set of financial options due to Social Security rules determining retirement, spousal, and survivor benefits, along with benefit adjustments that vary with the age at which these are claimed. These rules influence optimal household asset allocation, insurance, and work decisions, given life cycle demographic shocks such as marriage, divorce, and children. Our model generates a wealth profile and a low and stable equity fraction consistent with empirical evidence. We also confirm predictions that wives will claim retirement benefits earlier than husbands, while life insurance is mainly purchased by younger men. Our policy simulations imply that eliminating survivor benefits would sharply reduce claiming differences by sex while dramatically increasing men’s life insurance purchases.Publication Time is Money: Life Cycle Rational Inertia and Delegation of Investment Management(2013-11-01) Kim, Hugh Hoikwang; Maurer, Raimond; Mitchell, Olivia SWe investigate the theoretical impact of including two empirically-grounded insights in a dynamic life cycle portfolio choice model. The first is to recognize that, when managing their own financial wealth, investors incur opportunity costs in terms of current and future human capital accumulation, particularly if human capital is acquired via learning by doing. The second is that we incorporate age-varying efficiency patterns in financial decisionmaking. Both enhancements produce inactivity in portfolio adjustment patterns consistent with empirical evidence. We also analyze individuals’ optimal choice between self-managing their wealth versus delegating the task to a financial advisor. Delegation proves most valuable to the young and the old. Our calibrated model quantifies welfare gains from including investment time and money costs, as well as delegation, in a life cycle setting.Publication Employer 401(k) Matches for Student Debt Repayment: Killing Two Birds with One Stone?(2024-05-04) Horneff, Vanya; Maurer, Raimond; Mitchell, Olivia SAlmost 50 million Americans are burdened by the need to repay close to $2 trillion in student loan debt obligations, while at the same time saving in their employer-provided pension accounts. This article shows how workers can maximize their lifetime wellbeing by timing loan repayment and saving in tax-qualified retirement plans when these choices are shaped by employer-sponsored matching retirement contributions for qualifying student loan payments, as intended by the 2022 SECURE 2.0 Act. Our rich life cycle model predicts that, by age 50, employees will repay more debt but reduce own retirement plan contributions by almost half, offset by higher employer-matching contributions that take loan repayments into account. Accordingly, pre-retirement financial assets in and outside DC plans barely change; moreover, workers’ optimal consumption rises by up to 3% prior to retirement, so that the reform will not lead to earlier loan discharges. Overall, 401(k) plan benefit payouts during retirement are not anticipated to change materially. Finally, our model predicts that anticipated additional employer costs due to the new matches will amount to around 2.4 – 4.3% of annual earnings for workers age 40 – 50, and expected federal income taxes paid over the lifetime would increase by about 1.8 – 2.5% (in present value).