NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Joshua B. Hurwitz

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NBER Working Papers and Publications

June 2015Liquidity in Retirement Savings Systems: An International Comparison
with John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian
in Insights in the Economics of Aging, David A. Wise, editor
What is the socially optimal level of liquidity in a retirement savings system? Liquid retirement savings are desirable because liquidity enables agents to flexibly respond to preretirement events that raise the marginal utility of consumption. On the other hand, preretirement liquidity is undesirable when it leads to under-saving arising from, for example, planning mistakes or self-control problems. This paper compares the liquidity that six developed economies have built into their employer-based defined contribution (DC) retirement savings systems. We find that all of them, with the sole exception of the United States, have made their DC retirement assets overwhelmingly illiquid before age 55. This paper compares the liquidity that six developed economies have built into their employer-...
 
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