The Impact of 401(K) Plans on Retirement

UCSD Economics Discussion Paper No. 2000-30

37 Pages Posted: 9 May 2001

See all articles by Leora Friedberg

Leora Friedberg

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Anthony Webb

Boston College - Center for Retirement Research

Date Written: November 2000

Abstract

In 1993, 38.9 million people were covered by a 401(k) plan, up from 7.1 million in 1983. The rapid growth of 401(k) and other defined contribution pension plans may alter retirement patterns of older workers. Previous research showed that the spread of defined benefit plans, with sharp age-related incentives first discouraging and later encouraging retirement, contributed to the early retirement trend of past decades. Defined contribution plans differ along several dimensions, especially in their smooth rate of pension wealth accrual. We use data from the Health and Retirement Study to show that retirement patterns have begun to change as defined contribution plans have spread. Our estimates indicate that the financial incentives in defined benefit pensions lead people to retire almost two years earlier on average, compared to people with defined contribution plans.

JEL Classification: H31, J26, J32, J60

Suggested Citation

Friedberg, Leora and Webb, Anthony, The Impact of 401(K) Plans on Retirement (November 2000). UCSD Economics Discussion Paper No. 2000-30. Available at SSRN: https://ssrn.com/abstract=256065 or http://dx.doi.org/10.2139/ssrn.256065

Leora Friedberg (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3225 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Anthony Webb

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
159
Abstract Views
1,457
rank
186,098
PlumX Metrics