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Prior studies have had difficulty assessing the value of expected pension resources, partly because many workers cannot recollect and report their pension entitlements, and partly because dual-earner couples may be individually, and sometimes jointly, entitled to claims on company pensions. This chapter develops and applies a new way to value pension wealth, so as to determine the importance of pension benefits in retiree wellbeing. We estimate the value of pensions for workers on the threshold of retirement in 1992, 1998, and 2004, drawing on Health and Retirement Study data. Results indicate a drop in the number of workers with defined benefit plans near retirement, though their average pension values rose. Turning to defined contribution plans, coverage and the average real value of the pensions rose, producing an overall increase in average pension wealth over the period examined. There is no support for the view that pensions are becoming less important for near-retirees, on average.
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All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2006 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.
The authors are grateful for financial support from the Pension Research Council, the National Institute on Aging, The Social Security Administration, and The Department of Labor.
Date Posted: 28 August 2019