Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



This paper explores understand how earnings variability influences peoples’ retirement preparedness by influencing their accumulated wealth levels as of retirement age. Prior research has demonstrated that the US average household nearing retirement would need to save substantially more in order to preserve consumption in old age. While some socioeconomic factors have been suggested that might explain shortfalls, previous studies have not assessed the role of earnings variability over the lifetime as a potential explanation for poor retirement prospects. Thus two workers having identical levels of average lifetime earnings might have had very different patterns of earnings variability over their lifetimes. Such differences could translate into quite different retirement wealth outcomes. We evaluate the effect of earnings variability on retirement wealth using information supplied by respondents to the Health and Retirement Study (HRS). This is a rich and nationally representative dataset on Americans on the verge of retirement, with responses linked to administrative records from the Social Security Administration. Our research illuminates key links between lifetime earnings variability and retirement wealth.


Retirement, retirement policies, social security, public pensions

JEL Code

J26, H55

Working Paper Number


Copyright/Permission Statement

©2003 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved


The researchers acknowledge support from the Social Security Administration via the Michigan Retirement Research Center at the University of Michigan, under subcontract to the University of Pennsylvania. Additional support was provided by the Pension Research Council at the Wharton School and the Huebner Foundation. An earlier version of this paper was presented at the Fifth Annual Joint Conference of the Retirement Research Consortium, May 2003, Washington, D.C. Comments and suggestions from Gary Engelhardt and Eytan Sheshinksi are appreciated. Opinions are solely those of the authors and not of the institutions with which the authors are affiliated. This research is part of the NBER programs on Aging and Labor Economics

Included in

Economics Commons



Date Posted: 04 September 2019