Boosting Economic Mobility through Prize-Linked Savings

Stuart Butler
Distinguished Fellow and Director, Center for Policy Innovation
The Heritage Foundation
David C. John
Senior Strategic Policy Advisor
AARP Public Policy Institute
Investment Company Institute
1401 H Street, NW
Suite 1200
Washington, DC 20005

The savings rate in America has been in decline for three decades, with roughly one-third of households having no savings at all. Analyses of economic mobility explore why some people are successful in moving up the economic ladder during their lifetime while others are not. While there is much debate about the degree of opportunity in America, there is general agreement that there seem to be significant obstacles facing Americans who start out in households at the bottom end of the income spectrum. But even for those starting at the bottom, lifetime trajectories vary widely. The habit of saving is a critically important complement to education and social “capital” needed for upward mobility. But we need to recognize that there are many Americans who are not inclined to take part in traditional programs designed to build a savings habit. For these Americans, financial incentives and tools with approaches that have a more emotional appeal are a more effective way of creating a culture of savings by channeling the instinct to gamble into systematic savings. This approach, known as “prize-linked savings” employs the techniques of behavioral economics to turn a behavior pattern into a savings habit that enhances the economic mobility of a household.

Jonathan Forman Discusses a Solution to State and Local Pension Underfunding

For a Lunch Meeting with Guest Speaker:

Jonathan Forman

Alfred P. Murrah Professor of Law

University of Oklahoma

Who will discuss his paper:

Tontine Pensions: A Solution to the State and Local Pension Underfunding Crisis

Thursday May 8, 2014

Noon-1:00 p.m.

Location: ATR

722 12th Street, NW Suite 400

Washington, D.C. 20005

Mark Iwry Discusses “myRA”

For a Lunch Meeting with Guest Speaker:

Mark Iwry
Deputy Assistant Secretary (Tax Policy) for Retirement and Health Policy
U.S. Treasury Department


The President’s Proposal to Expand Retirement Savings

Wednesday March 12, 2014
Noon-1:00 p.m. 

J. Mark Iwry is Senior Advisor to the Secretary of the Treasury and is the Deputy Assistant Secretary (Tax Policy) for Retirement and Health Policy at the U.S. Treasury Department.  Mr. Iwry was previously a Nonresident Senior Fellow at the Brookings Institution, Research Professor at Georgetown University, Of Counsel to the law firm of Sullivan & Cromwell LLP, and a Principal of the Retirement Security Project.  He was the Treasury Department’s Benefits Tax Counsel from 1995 to 2001, serving as the principal official directly responsible for tax policy and regulation relating to the Nation’s qualified pension and 401(k) plans, employer-sponsored health plans, deferred compensation, and other employee benefits.

Mark Warshawsky Discusses Long-Term Care

Mark Warshawsky
Vice-Chair, Commission on Long-Term Care

Who will discuss

Commission on Long-Term Care: Public and Private Issues in Long-Term Care Financing

Noon to 1:30 pm


Investment Company Institute
1401 H Street, NW #1100
Washington, D.C. 20005

Mark Warshawsky is a prominent researcher on retirement plans and products and the risks facing retirees. He is a coauthor of “Fundamentals of Private Pensions” and author of “Retirement Income: Risks and Strategies,” as well of more than a hundred published professional papers. He was a member of the Social Security Advisory Board from 2006 to 2012 and is now Vice Chair of the federal Commission on Long-Term Care. From 2004 to 2006, Warshawsky served as assistant secretary for economic policy at the US Department of the Treasury, playing a key role in the development of the Pension Protection Act of 2006, the Social Security and Medicare Trustees’ Reports, and the terror risk insurance program.

Jagadeesh Gokhale Discusses SSDI Reform

Jagadeesh Gokhale
Senior Fellow
Cato Institute

He will discuss his new paper: A New Approach to SSDI Reform

Jagadeesh Gokhale is recognized internationally as an expert on entitlement reform, labor productivity and compensation, U.S. fiscal policy and the impact of fiscal policy on future generations. He works with Cato’s Project on Social Security Choice to develop reforms for programs such as Social Security and Medicare.

Hilary Waldron Discusses Mortality Differentials for Lifetime Earnings

Join Us For a Lunch Meeting with Guest Speaker:

Hilary Waldron

Economist with the Social Security Administration

Who will discuss her paper:

Mortality Differentials by Lifetime Earnings Decile

Wednesday, July 17, 2013

Noon-1:00 p.m.


Information Technology and Innovation Foundation

1101 K Street N.W. Suite 610,

Washington, DC 20005

Noon-1:00 p.m.


To evaluate the distributional effects of some proposed Social Security law changes, such as an increase in Social Security’s early entitlement age, retirement policy analysts typically tabulate the number of workers who fall below a predetermined threshold of hardship. Analysts using this technique often implicitly assume that the insured population falls neatly into a low-earnings poor health group and a remaining good health group. If the hardship threshold assumption is correct, there should be no difference in mortality risk between lifetime earnings deciles above a hardship threshold. This study finds that the hardship threshold model is overwhelmingly rejected in US Social Security data, a result consistent with similar studies conducted in Canada, Germany, and England.


Hilary Waldron has worked as an economist with the Social Security Administration since 1997. Much of her work has been concentrated on mortality, retired worker claiming behavior, and earnings patterns.  Her recent paper, “Mortality Differentials by Lifetime Earnings Decile:  Implications for Evaluations of Proposed Social Security Law Changes” is a part of a three part series looking at ways of evaluating the distributional effects of proposed changes to Social Security’s retired worker benefit.

Felix Reichling and Kent Smetters Discuss Annuitization

For a Lunch Meeting with Guest Speaker:

        Felix Reichling, Congressional Budget Office and Kent Smetters, Wharton School  

                                           Who will discuss a new CBO paper:

Optimal Annuitization with Stochastic Mortality Probabilities

Wednesday, June 19, 2013

Noon-1:00 p.m.


Fidelity Investments

325 7th St. NW

Washington, DC

(Lunch will be provided)


The conventional wisdom dating back to Yaari (1965) is that households without a bequest motive should fully annuitize their investments. Various market frictions do not break this sharp result. This paper demonstrates that incomplete annuitization can be optimal in the presence of stochastic mortality probabilities, even without liquidity constraints. Moreover, stochastic mortality is a mechanism for various frictions to reduce annuity demand. Simulation evidence demonstrates that it is optimal for most households to not annuitize any wealth. Optimal aggregate net annuity holdings is likely even negative.

Jonathan Forman and Sandy Mackenzie Discuss Reforming the US Pension System

For a Lunch Meeting with Guest Speakers:

                   Jonathan Forman              G.A. (Sandy) Mackenzie

     Alfred P. Murrah Professor of Law                                Editor

              University of Oklahoma               The Journal of Retirement

Who will discuss their paper:

Reforming the Second Tier of the US Pension System: Tabula Rasa or Step by Step?

Thursday May 9, 2013

Noon-1:00 p.m.



601 E St. NW
Washington DC 20049

Peter Brady Discusses the Success of the US Retirement System

For a Lunch Meeting with Guest Speaker:

Peter Brady

Senior Economist at Investment Company Institute
Who will discuss his paper

The Success of the US Retirement System

Date: Tuesday, April 16th

Noon-1:00 p.m.


Investment Company Institute

1401 H St., NW, Suite 1200
Washington, DC 20005


This study examines the empirical evidence on the effectiveness of the U.S. retirement system. The empirical evidence demonstrates that the U.S. retirement system is successful. On average, households are able to maintain their standard of living in retirement. To the extent that there has been a trend in retiree well-being, measures such as income, wealth, and poverty rates show that successive generations of retired households have become better off—not worse off—over time. The U.S. retirement system will face many challenges and—as has always been the case—the future is uncertain. However, changes to private-sector retirement saving—in particular, the growing importance of employer-sponsored defined contribution (DC) retirement plans and individual retirement accounts (IRAs)—do not represent a major challenge for the system. To date, the shift to a more account-based system has not been associated with a reduction in the income of retired households, and there is reason to believe that many households will benefit from this shift.

Gaobo Pang Discusses the Retirement Savings Adequacy of U.S. Workers

For a Lunch Meeting with Guest Speakers:

Gaobo Pang

Senior Economist


Mark Warshawsky

Director of Retirement Research


Towers Watson

Who will discuss a new paper:

Retirement Savings Adequacy of U.S. Workers

Location:  New America Foundation

1899 L Street, NW

3rd Floor, The Classroom

Washington, DC 20036

Tuesday March 5, 2013

Noon-1:00 p.m.


This analysis examines whether U.S. workers are saving adequately for retirement. The target levels of retirement savings are derived by a comprehensive consumption and savings model in a life-long planning framework. The actual wealth of a representative sample of U.S. households is computed from the Survey of Consumer Finances. Comparing the model targets with the actual savings suggests that 44 percent of workers in 2010 are saving inadequately if they were planning to retire at the normal age for full Social Security benefits; alternatively, 52 percent are inadequately prepared for retirement if they were planning to retire at their desired ages, typically younger. The prevalence of savings inadequacy has worsened, by 6-8 percent of households, compared to 2007 when the prospect of retirement looked brighter at the height of the market in the last decade. Asset value losses in retirement accounts during the financial crisis and the decline of DB coverage are significant explanatory factors.

Stephen Goss Discusses Mortality and Entitlement Costs

For a Lunch Meeting with Guest Speaker:

Stephen C. Goss

Chief Actuary of the Social Security Administration

Who will discuss

Mortality and Entitlement Costs: Long-run Projections

Location:  ITIF

1101 K Street N.W. Suite 610,

Washington, DC 20005

Tuesday February 19, 2013

Noon-1:00 p.m.

Stephen C. Goss has been with SSA for over 30 years, working in areas related to health insurance and long-term-care insurance as well as pension, disability, and survivor protection. Mr. Goss is Chief Actuary at the Social Security Administration. He joined the Office of the Chief Actuary after earning his M.S. in Mathematics from the University of Virginia in 1973, and B.S. in Mathematics and Economics from the University of Pennsylvania in 1971.

Steve Goss worked closely with Congressional staff on the 1983 Social Security Amendments, testified at Committee hearings, and was instrumental in the development of the provision for increasing the normal retirement age. He represented the United States at the Third International Social Security Seminar for Actuaries and Statisticians in Rome in 1988.

In 2004, Stephen C. Goss was honored as the first recipient of the Robert M. Ball Award for Outstanding Achievements in Social Insurance by the National Academy of Social Insurance, for exemplifying “public service” at its best.