`Collaborative Research: How Does Knowledge Affect Behavior? The Role of Pension Knowledge in Retirement-Related Decisions

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This project examines the importance of individual knowledge of pensions and Social Security benefits for several major economic decisions. There is now clear evidence that many older workers do not know their pension plan details or the benefits they are eligible for upon retirement. However, most economic research on retirement related decisions uses administrative data that the individuals themselves may not fully understand. Our project focuses on understanding the ways in which these misperceptions about pensions and Social Security directly affect retirement and related decisions. Because potential policy changes will be associated with different levels of transparency and public knowledge, it is crucial to understand how knowledge interacts with retirement income programs if we are to accurately predict how individuals respond to such programs. The project will build on our previous work in several ways. We will continue and extend our analysis of the retirement decision and its relationship to knowledge by (i) using new measures of actual pension benefits received that can then be compared to those based on individual perceptions prior to retirement, (ii) by analyzing both retirement itself and retirement expectations, (iii) by expanding the number of years of data from the Health and Retirement Study that we utilize. These steps will allow us to expand our understanding of how individual knowledge about retirement income, or lack thereof, affects the decisions made by older Americans.