How Does Local Cost-of-Living Affect Retirement for Low and Moderate Earners?

Laura D. Quinby and Gal Wettstein

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

Abstract: This paper uses the Health and Retirement Study to explore how local cost-of-living affects Social Security replacement rates and household behavior. In theory, labor markets with high cost-of-living also offer more compensation. If this compensating differential is paid in wages, rather than benefits, it reduces the share of earnings replaced by Social Security due to the progressive benefit structure. This paper examines how important the cost-of-living penalty is, in practice, and whether it impacts households’ saving or labor supply.

Pages: 32 pages
Date: 2022-11
New Economics Papers: this item is included in nep-age and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:crr:crrwps:wp2022-15

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