Document Type
Working Paper
Date of this Version
12-6-2022
Abstract
Older people often express regret about financial decisions made earlier in life that left them susceptible to old-age insecurity. Prior work has explored one outcome, saving regret, or peoples’ expressed wish that they had saved more earlier in life. The present paper extends attention to five additional areas regarding financial decisions, examining whether older Americans also regret not having insured better, claimed benefits and quit working too early, and becoming financially dependent on others. Using a controlled randomized experiment conducted on 1,764 respondents age 50+ in the Health and Retirement Study, we show that providing people objective longevity information does alter their self-reported financial regret. Specifically, giving people information about objective survival probabilities more than doubled regret expressed about not having purchased long term care, and it also boosted their regret by 2.4 times for not having purchased lifetime income. We conclude that information provision can be a potent, as well as cost-effective, method of alerting people to retirement risk.
Keywords
retirement, insurance, benefit claiming, annuitization, financial dependence
JEL Code
D14, D15, D83, G22, G41, G51
Working Paper Number
WP2022-25
Copyright/Permission Statement
All findings and conclusions expressed are those of the authors and not the official views of the other institutions with which the authors are affiliated. This research is part of the NBER Aging program and the Household Portfolio workshop. © 2022 Hurwitz and Mitchell
Acknowledgements
The authors acknowledge research support for this work from the Health and Retirement Study at the University of Michigan, and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania. We thank Yong Yu for excellent programming.
Date Posted: 21 November 2022