EMF21-03: Financial Health of Retirees and People with Disabilities: The Role of Income and Expenditure Timing

People with disabilities and retirees face significant barriers to securing financial health. Short-term financial volatility related to the timing of cash inflows and outflows may have adverse effects on financial health. Recent work has found that, counter to life cycle theory, people respond to timing in consumption decisions. Those unable to optimize timing of income and expenditures may have trouble managing day-to-day finances and absorbing financial shocks. Using unique, longitudinal survey and financial transaction data from the 2016-2019 Federal Reserve of Atlanta’s Diary and Survey of Consumer Payment Choice, this study will examine the impact of income and expenditure timing on the financial health of people with disabilities and retirees. In addition to main effects of timing, the study will exploit random assignment to Social Security payment dates to identify the effect for Social Security income. Leveraging the panel nature of the data, this study explores the role of disability onset and retirement timing on a wide range of financial outcomes. The proposed project offers new evidence on the role of payment timing as well as insights into the financial lives of two target populations for Social Security programs. The findings from this study will inform the optimal design of policies and programs that support the financial health of older adults and people with disabilities.