Personal Retirement Accounts and Saving

Published in: American Economic Journal: Economic Policy, v. 3, no. 4, Nov. 2011, p. 1-24

Posted on RAND.org on November 01, 2011

by Emma Aguila

Read More

Access further information on this document at www.aeaweb.org

This article was published outside of RAND. The full text of the article can be found at the link above.

Aging populations are leading countries worldwide to social security reforms. Many countries are moving from pay-as-you-go to personal retirement account (PRA) systems because of their financial sustainability and positive impact on private savings. PRA systems boost private savings at a macro level by converting a government liability into financial wealth managed by private fund managers. However, at a micro level, changes in retirement wealth affect individuals' saving and consumption patterns through their working lives. Retirement wealth increased for lower-income workers after Mexico introduced PRAs, crowding out saving, increasing consumption, and offsetting some of the PRA effect on private savings.

This report is part of the RAND Corporation external publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.