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U.S. Workers' Investment Decisions for Participant-Directed Defined Contribution Pension Assets

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  • Thomas L. Hungerford

Abstract

Two issues may have a tremendous impact on the adequacy of retirement income for today's workers: the growth of 401(k) pension plans and the possible privatization of Social Security. Workers are becoming increasingly responsible for the adequacy of their retirement income by determining how their retirement savings are invested. This paper examines the investment choices of workers covered by a defined contribution pension plan with responsibility for investments, specifically incorporating self-selection into DC pension plans. The results suggest that (1) current DC plan participants tend to be more aggressive investors than the general work force would be; (2) workers in certain demographic groups tend to invest their pension assets more conservatively than others; and (3) selection is present but appears to be economically unimportant.

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  • Thomas L. Hungerford, 2003. "U.S. Workers' Investment Decisions for Participant-Directed Defined Contribution Pension Assets," Economics Working Paper Archive wp_375, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_375
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    8. Martha Starr-McCluer & Annika E. Sunden, 1999. "Workers' knowledge of their pension coverage: a reevaluation," Finance and Economics Discussion Series 1999-05, Board of Governors of the Federal Reserve System (U.S.).
    9. Papke, Leslie, 1998. "How Are Participanats Investing Their Accounts in Participant-Directed Individual Account Pension Plans?," American Economic Review, American Economic Association, vol. 88(2), pages 212-216, May.
    10. Gary Burtless, 2000. "How Would Financial Risk Affect Retirement Income Under Individual Accounts?," Issues in Brief ib-5, Center for Retirement Research.
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