How do Responses to the Downturn Vary by Household Characteristics?

12 Pages Posted: 21 Nov 2010

See all articles by Norma Coe

Norma Coe

University of Pennsylvania - Perelman School of Medicine

Kelly Haverstick

Boston College - Center for Retirement Research

Date Written: November 19, 2010

Abstract

The stock market crash eliminated more than $2 trillion in wealth held in defined contribution retirement accounts, about one-third of the pre-crash total. Unless offset by a later retirement age and/or increased retirement saving, this wealth shock will significantly reduce the retirement incomes of workers now approaching retirement – cohorts who will depend primarily on 401(k) balances once they stop working.

To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the 2009 Retirement Survey in July-August 2009. This brief is the second of four based on this nationally-representative survey of workers aged 45-59 who had substantial retirement assets prior to the downturn.1 The first brief described the Survey and highlighted the inclusion of numerous financial, employment, and behavioral factors that are omitted from other surveys.2 This brief explores the relationship between these factors and worker responses to the downturn.

The first section provides a brief overview of the responses – work longer, save more, or both – and the remaining sections describe the empirical analysis conducted for each response.

Keywords: retirement, stock market crash, brief

JEL Classification: J26

Suggested Citation

Coe, Norma and Haverstick, Kelly, How do Responses to the Downturn Vary by Household Characteristics? (November 19, 2010). Available at SSRN: https://ssrn.com/abstract=1711963 or http://dx.doi.org/10.2139/ssrn.1711963

Norma Coe (Contact Author)

University of Pennsylvania - Perelman School of Medicine ( email )

423 Guardian Drive
Philadelphia, PA 19104
United States

Kelly Haverstick

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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