What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population
36 Pages Posted: 3 Nov 2009 Last revised: 6 Mar 2022
Date Written: October 2009
Abstract
This paper investigates the effect of the current recession on the near-retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average. Health and Retirement Study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices. We end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Retirement and the Evolution of Pension Structure
By Leora Friedberg and Anthony Webb
-
Explaining the Evolution of Pension Structure and Job Tenure
By Leora Friedberg and Michael Owyang
-
How Does Job Loss Affect the Timing of Retirement?
By Sewin Chan and Ann Huff Stevens
-
Wealth Shocks and Retirement Timing: Evidence from the Nineties
By Purvi Sevak
-
Defined Contribution Plans, Defined Benefit Plans, and the Accumulation of Retirement Wealth
By James M. Poterba, Joshua D. Rauh, ...
-
Bulls, Bears, and Retirement Behavior
By Courtney Coile and Phillip B. Levine
-
Labor Market Shocks and Retirement: Do Government Programs Matter?
By Courtney Coile and Phillip B. Levine
-
The Effect of Inheritance Receipt on Retirement
By Jeffrey R. Brown, Courtney Coile, ...
-
The Effect of Inheritance Receipt on Retirement
By Jeffrey R. Brown, Courtney Coile, ...