Liquidity in Retirement Savings Systems: An International Comparison
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 pre-retirement events that raise the marginal utility of consumption. On the other hand, pre-retirement 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 systems overwhelmingly illiquid before age 55.
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Copy CitationJohn Beshears, James J. Choi, Joshua Hurwitz, David Laibson, and Brigitte C. Madrian, "Liquidity in Retirement Savings Systems: An International Comparison," NBER Working Paper 21168 (2015), https://doi.org/10.3386/w21168.
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Published Versions
John Beshears & James J. Choi & Joshua Hurwitz & David Laibson & Brigitte C. Madrian, 2015. "Liquidity in Retirement Savings Systems: An International Comparison," American Economic Review, American Economic Association, vol. 105(5), pages 420-25, May. citation courtesy of
Liquidity in Retirement Savings Systems: An International Comparison, John Beshears, James J. Choi, Joshua Hurwitz, David Laibson, Brigitte C. Madrian. in Insights in the Economics of Aging, Wise. 2017