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401(k) Participant Behavior in a Volatile Economy

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  • Barbara A. Butrica
  • Karen Elizabeth Smith

Abstract

The booms and busts of the late 1990s and 2000s have taken 401(k) plan participants on a rollercoaster ride. Using data from administrative tax records and household surveys, this paper examines how participants responded to these periods of economic expansions and contractions by documenting changes in 401(k) participation, contributions, and investment allocation from 1990 through 2010. Controlling for earnings, job changes, and other household factors, we show that 401(k) participation and contributions decline during recessions. The Great Recession could lower the 401(k) assets of the typical 30-year-old by as much as 9 percent at age 62.

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File URL: http://crr.bc.edu/working-papers/401k-participant-behavior-in-a-volatile-economy/
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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2012-24.

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Length: 58 pages
Date of creation: Nov 2012
Date of revision: Nov 2012
Handle: RePEc:crr:crrwps:wp2012-24

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Cited by:
  1. James M. Poterba, 2014. "Retirement Security in an Aging Society," NBER Working Papers 19930, National Bureau of Economic Research, Inc.

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