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Precautionary Liquidity and Retirement Saving

Author

Listed:
  • Marie Briere
  • James Poterba
  • Ariane Szafarz

Abstract

Precautionary demand for liquidity manifests itself as a preference for holding assets in an accessible form not because of any current liquidity need but because of a possible future need. We explore such demand by analyzing employer-sponsored retirement saving plans in France, where firms must offer medium-term investment vehicles that cannot be accessed for five years. Some also offer long-term vehicles that cannot be accessed until retirement. Plan take-up is lower when there is a long-term option; more workers opt out of the plan default when it includes one; and when hardship strikes, workers tend to withdraw long-term funds before medium-term funds.

Suggested Citation

  • Marie Briere & James Poterba & Ariane Szafarz, 2022. "Precautionary Liquidity and Retirement Saving," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 147-150, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:147-50
    DOI: 10.1257/pandp.20221022
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    Cited by:

    1. Bateman, Hazel & Dobrescu, Loretti I. & Liu, Junhao & Newell, Ben R. & Thorp, Susan, 2023. "Determinants of early-access to retirement savings: Lessons from the COVID-19 pandemic," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    2. Laureti, Carolina & Szafarz, Ariane, 2023. "Banking regulation and costless commitment contracts for time-inconsistent agents," Economic Modelling, Elsevier, vol. 129(C).

    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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