Associate Professors of Economics Ann Owen and Steve Wu published "Financial Shocks and Worry about the Future" in the November issue of Empirical Economics. The article shows that households that experience adverse financial shocks worry more about the adequacy of their financial resources in retirement, even after controlling for the effects of these shocks on overall wealth. They find supporting evidence that suggests that at least part of the increased worry about retirement is due to general pessimism rather than changes in an individual's own circumstances. Specifically, experiencing idiosyncratic financial shocks is also associated with greater pessimism about the general future of the economy. This line of research ties into work of other economists that attempts to explain the low savings rate in the U.S., even among those who are near retirement.
