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Effects of Stock Market Fluctuations on the Adequacy of Retirement Wealth Accumulation

Author Info

  • Eric M. Engen

    ()

    (American Enterprise Institute)

  • William G. Gale

    ()

    (The Brookings Institution)

  • Cori E. Uccello

    ()

    (Urban Institute)

Abstract

This paper examines the relation between fluctuations in the aggregate value of equities and the adequacy of households’ saving for retirement. We find that many and perhaps most households appear to be saving adequate amounts for retirement, but almost no link between stock values and the adequacy of retirement saving. Historical variation in equity values and ownership correlates poorly with historical variation in the adequacy of saving. Even a simulated 40 percent decline in stocks has little effect on the adequacy of saving. The results occur because equities are concentrated among households with significant amounts of other wealth.

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File URL: http://crr.bc.edu/working-papers/effects-of-stock-market-fluctuations-on-the-adequacy-of-retirement-wealth-accumulation/
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Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number 2004-16.

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Length: 37 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:crr:crrwps:2004-16
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Keywords: retirement; saving; stocks; equities;

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Find related papers by JEL classification:
  • D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving

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  1. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 3-95, Wharton School Rodney L. White Center for Financial Research.
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  3. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2000. "Do the Rich Save More?," NBER Working Papers 7906, National Bureau of Economic Research, Inc.
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  5. James Banks & Richard Blundell & Sarah Tanner, 1995. "Is there a retirement-savings puzzle?," IFS Working Papers W95/04, Institute for Fiscal Studies.
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  8. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  9. Christopher D Carroll, 1997. "Why Do the Rich Save So Much?," Economics Working Paper Archive 388, The Johns Hopkins University,Department of Economics.
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Cited by:

  1. Courtney C. Coile & Phillip B. Levine, 2006. "Bulls, Bears, and Retirement Behavior," ILR Review, Cornell University, ILR School, vol. 59(3), pages 408-429, April.
  2. James Banks & Rowena Crawford & Thomas Crossley & Carl Emmerson, 2012. "The effect of the financial crisis on older households in England," IFS Working Papers W12/09, Institute for Fiscal Studies.
  3. David A. Love & Michael G. Palumbo & Paul A. Smith, 2008. "The trajectory of wealth in retirement," Finance and Economics Discussion Series 2008-13, Board of Governors of the Federal Reserve System (U.S.).
  4. Davies, James B. & Yu, Xiaoyu, 2013. "Impacts of Cyclical Downturns on the Third Pillar of the RIS and Policy Responses," CLSSRN working papers clsrn_admin-2013-20, Vancouver School of Economics, revised 29 Apr 2013.

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