/213_RAND_Retirement_Assets

for imputation of respondents who do not know or refuse to answer direct questions.

The HRS asks individuals who are (still) working whether their employer offers a pension plan, and if so, whether it is a defined benefit (DB) or defined contribution (DC) plan and whether they are enrolled in it. (The HRS includes data on individuals enrolled in both a DB and a DC plan.) Individuals bear the market risk for DC plans, while DB plans provide guaranteed income (although they are still subject to inflation risk). Presence or absence of these plans can influence households’ direct stock holding, because they are part of the total wealth portfolio. One might assume that households with DB plans will typically have more risky assets in other parts of their portfolios (e.g., more direct stock holding), while households with DC plans may be more conservative in other parts of their portfolios.2 Upon an individual’s retirement, a DB plan typically takes the form of annuity payments, while a DC plan can be cashed to obtain a lump sum (which can be invested in stocks, annuities, or other assets). Sometimes, DC plans are not immediately cashed after retirement. Thus, current pension plan enrollment is likely to affect stock holding, both before and after retirement.

The HRS indicates retirement status in two places (St. Clair et al.

2008, 850). One is the question, “At this time do you consider yourself completely retired, partly retired, or not retired at all?” The other is the labor force participation question. In identifying retirees, we give priority to the first question because we believe that this more accurately reflects how respondents view themselves and thus will be more closely linked to behaviors of interest regarding retirement.

For respondents who did not answer this question, we used the labor force participation question to determine retirement status. For respondents who retired but later worked again, we used the initial retirement date in analyzing behavior before and after retirement.

The HRS also asks a series of questions on bequests. In most waves, it first asks respondents the probability of leaving a bequest of $10,000 or more. Respondents who indicate a greater than zero probability of such a bequest are asked the probability of leaving a bequest of $100,000 or more; those who indicate a zero probability are asked the probability of leaving any bequest. However, in the first two AHEAD waves, the routing through these questions is different, and in the first HRS wave, a different bequest expectation question was asked.

The HRS collects data on memory, computational ability, and basic cognitive ability. All waves of the HRS ask respondents to recall a list of 10 words immediately after reading (with the 1992 and 1994 waves asking 20 words) and to recall them again about 20 minutes 6