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Retirement Planning > Saving for Retirement

CFP Board Picks 7 Best Retirement Research Papers of 2023

By John Manganaro

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Given its fundamental importance to the lives and aspirations of most working Americans, the topic of optimal retirement planning rightly receives a lot of attention from academic and industry researchers, and that was clearly in the case once again in 2023.

As various experts have told ThinkAdvisor, a groundswell of innovative retirement research was released throughout the year, featuring both new and well-known authors tackling some of the biggest planning questions facing those leaving the workforce today: How can pension-less investors effectively balance market risk and longevity risk? What are the best approaches to mitigating taxes in retirement? What role might guaranteed annuities play? Are rigid or flexible spending approaches superior?

This broad focus on retirement issues is reflected in the success of researchers recognized by the CFP Board Center for Financial Planning, which announced its 2023 Best Paper Awards earlier in December during its seventh annual Academic Research Colloquium. Many of the papers accepted for presentation at the colloquium this year touch directly on these and other timely retirement questions.

In the words of the Certified Financial Planner Board of Standards’ CEO Kevin Keller, this year’s contributors and award winners produced some “outstanding papers,” and he thanked both emerging scholars and lifelong contributors in the financial services field for their innovative work.

Here are seven retirement-focused papers recognized by the CFP Board for their contributions to the retirement planning profession in 2023.

1. Economic Security of Older Adults after the Death of a Partner: Evidence From Credit Data

From a quintet of researchers from Ohio State University, this paper starts from the premise that the death of a partner has long been recognized as a threat to the economic security of older adults.

Despite this, the authors say, little is known about changes in credit and debt for surviving older adults. Further, the financial implications of a partner’s death may differ for unexpected deaths, such as those during the COVID-19 pandemic.

The authors thus examine the relationships between the death of a partner and the economic security of surviving older adults in the pre-pandemic and pandemic periods, spanning 2017 to 2021. They do so utilizing a “unique panel dataset” that combines individual-level administrative wage data and detailed financial information.

The authors find a significant increase in missed debt payments and persistent decline in credit scores following the death of a partner, especially among vulnerable older adults.

2. Retirement Expectations vs. Reality: Factors That Impact Retirement Decisions

Among the authors of this analysis are Zhikun Liu, of MissionSquare Retirement, and David Blanchett, of PGIM.

The authors use a dataset consisting of results from Prudential’s annual financial wellness survey and the University of Michigan Health and Retirement Study. Their work demonstrates that, although there is generally a natural upward trend for older Americans to progressively delay their expected retirement, this trend has no statistically significant relationship with the COVID-19 pandemic.

According to the authors, the distribution of older Americans’ expected retirement ages is “bimodal,” often centered around two Social Security Benefit claiming ages — the early retirement age and full retirement age.

The authors further show that Americans’ actual retirement ages are more likely to follow a left-skewed (retire earlier) distribution. They also analyze the most significant factors that influence retirement decisions relative to expectations, including health status, wealth status, mortality expectations and more.

3. Measures and Drivers of Financial Well-Being

This paper was put together by two researchers at Colorado State University, and it seeks to investigate the “drivers through which individuals attain financial well-being across its different dimensions,” including subjective retirement preparedness.

As the authors emphasize, data shows financial planners who aim to improve their clients’ sense of financial well-being need a nuanced understanding of factors contributing to these measures.

The authors find individual risk-discount tendencies, risk preferences and financial self-confidence consistently contribute to different indicators of financial well-being. In particular, they find significant evidence that both the risk-discount rate and self-confidence in financial decision-making have strong impacts on the various indicators of financial well-being, including the sense of retirement readiness.

Notably, higher financial literacy has an “important moderating role” in relation to these two drivers and to income, while personality traits, such as conscientiousness and neuroticism, are also influential.

4. Tax Loss Harvesting: Check Your Frequency

David Blanchett authored this analysis, digging into the question of how taxes can affect optimal investment strategies for certain types of investors, including those planning for retirement. As Blanchett finds, efficiently considering taxes has the potential to meaningfully increase expected risk-adjusted after-tax returns.

One example of a relatively well-known strategy that has the potential to generate tax alpha is tax loss harvesting, Blanchett explains, which involves actively realizing losses on holdings where those losses can be used to offset taxes incurred (or due) on other investments.

Blanchett explores how harvesting frequency can shape the expected gains from implementing a realistic strategy, with an additional focus on the realized losses in different market return environments.

According to Blanchett, the analysis clearly demonstrates that more frequent harvesting schedules generate significantly higher levels of realized losses and that the losses realized are likely to vary materially across market return environments.

5. The Value of Professional Financial Advice in a Crisis

This paper, by four researchers at Griffith University, starts from the premise that the COVID-19 pandemic caused tremendous uncertainty for countries and households.

Given this disruption, the authors seek to provide insights into the value of professional financial advice for consumers during times of crisis, especially with respect to investors’ abilities to avoid making emotion-based decisions that harm their financial wellness and retirement prospects.

According to the authors, clients in long-term advisory relationships were reported to panic less in response to the pandemic than other crises, and they are more likely to have strategies in place to buffer stress.

Overall, the evidence highlights the clear value of trusted advisors in improving consumer well-being, from the start of the investing journey to the end of retirement.

6. A Comparative Study of Planners’ and Clients’ Perspectives on Value

Authored by three researchers at Kansas State University, this paper considers how the role of financial advisors is changing over time, especially with respect to the expansion of services beyond investment recommendations and into such fields as retirement planning. The authors also consider how clients’ and advisors’ perceptions of value compare and contrast.

As the authors emphasize, client satisfaction is a cornerstone of success in the financial planning industry, and traditionally, financial planning prioritized quantitative outcomes such as superior investment performance.

However, the authors find technological advances like robo-advice and artificial intelligence are compelling financial planners to reassess how they demonstrate value to clients. In turn, the role of financial planners is increasingly shifting from transactional agents to trusted counselors.

7. The Role of Financial Literacy in Improving Financial Well-Being

The authors of this analysis, who hail from Texas Tech University and Kansas State University, investigate the relationship between financial literacy and individuals’ financial well-being at different life stages, utilizing data from the 2022 Survey of Household Economics and Decision making, which is a cross-sectional survey released by the Federal Reserve Board.

As the authors explain, the paper employs an “ordered profit model” to find the relationship between financial literacy and an individual’s financial well-being.

The study affirms the positive affect of financial literacy on financial well-being. Specifically, individuals with a better understanding of inflation, higher education levels and full-time employment status are more likely to experience better financial well-being, including during retirement.

The authors say their work also provides compelling evidence supporting the importance of the promotion of financial literacy in enhancing individuals’ financial well-being, both on the part of policymakers and advisory professionals.

John Manganaro

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