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

Levy Economics Institute Working Paper No. 375

27 Pages Posted: 10 Jun 2003

See all articles by Thomas L. Hungerford

Thomas L. Hungerford

National Academy of Social Insurance (NASI); Independent

Date Written: March 2003

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.

Keywords: Pensions, Asset Allocation, Defined Contribution Plans

JEL Classification: G11, G23, J32

Suggested Citation

Hungerford, Thomas L., U.S. Workers' Investment Decisions for Participant-Directed Defined Contribution Pension Assets (March 2003). Levy Economics Institute Working Paper No. 375. Available at SSRN: https://ssrn.com/abstract=388362 or http://dx.doi.org/10.2139/ssrn.388362

Thomas L. Hungerford (Contact Author)

National Academy of Social Insurance (NASI) ( email )

1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904
United States

Independent ( email )

No Address Available

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