UWM: Economist Shares Suggestions for Successful Retirement


MILWAUKEE – For Keith Bender, retirement well-being boils down to a couple key ideas: “Money isn’t everything,” but the type of pension a retiree has is important to well-being.

Bender, an associate professor of economics at the University of Wisconsin-Milwaukee, is focusing his research and writing on a relatively new research area – retirement satisfaction.

Both the Wall Street Journal and the Washington Post recently have cited Bender’s work in stories on “happiness” in retirement. “Economists prefer the term ‘well-being,’ rather than ‘happiness,’” says Bender with a smile, since it’s a little more scientific and less subjective.

However, he says he’s glad the media are paying attention to the topic.

With millions of baby boomers reaching retirement age over the next few years, it’s a subject of increasing interest, says Bender, and a natural outgrowth of his earlier studies of job satisfaction. Bender’s research focus is also influenced by his prior
experience — before coming to UWM seven years ago, he was an economist with the Social Security Administration.

His recent research on the well-being of retirees, done for the Center for Retirement Research at Boston College, analyzed Year 2000 data from the ongoing Health and Retirement Study. He focuses on retirement satisfaction, a measure of overall well-being, rather than studying common measures of economic well-being such as income or wealth. Like job satisfaction, retirement satisfaction is based on more than income. “Economic well-being is only one dimension of overall well-being,” Bender writes in an issue brief summarizing the research.

“Money truly isn’t everything,” says Bender. “It’s important, but there are a number of things that influence retiree overall well-being more than money.” Healthcare coverage and access to affordable medical care, for example, are much more important issues to retirees. That suggests, he says, that the President and Congress might want to focus the public policy debate on Medicare and medical reform as well as on Social Security.

A second key finding of Bender’s research is that the type of pension plan a retiree has impacts well-being. “The ones who have defined benefit plans are much happier than those who only have defined contribution plans.” This is not surprising, says Bender, because defined benefit pension plans (funded by employers) are “relatively risk free.” Defined contribution plans, however, like 401ks and 403bs, require employees to manage more of their own investments, giving retirees more to worry about. People were happy with plans that combined income from defined benefit and defined contribution plans. However, if the amount of dollars are the same from both types of pensions, people generally are happier if they have less risk in their retirement income, says Bender.

This finding also has policy implications, he says, since the current administration has been discussing moving Social Security more in the direction of a defined contribution plan. “People in public policy have to be cognizant of how risk influences the well-being and happiness of retirees. It’s more than a dollar issue.”

Other key findings of Bender’s research:

– Older retirees are generally happier than younger retirees.

– Not surprisingly, those who enjoy good health are happier than those with fair or poor health.

– Married retirees tend to be happier than those who aren’t married, and spouses who retire together are happier than when one spouse is retired and the other is still working.

– The reason for retirement impacts well-being. Those who voluntarily retired have higher levels of well-being than those who were forced to retire. This isn’t surprising, says Bender, since those who retire voluntarily have more time to prepare financially and psychologically. “The flexibility to choose when you retire appears to significantly improve retirement satisfaction.”

CONTACT: Keith Bender, 414-229-4761.