Effects of Stock Market Fluctuations on the Adequacy of Retirement Wealth Accumulation

22 Pages Posted: 22 Oct 2005

See all articles by Eric M. Engen

Eric M. Engen

Federal Reserve Board

William G. Gale

Brookings Institution

Cori E. Uccello

American Academy of Actuaries

Abstract

This paper examines the relation between fluctuations in the aggregate value of equities and the adequacy of households' saving for retirement. Using more recent data than most studies on this topic, we find that many and perhaps most households appear to be saving adequate amounts for retirement, and that there is almost no link between aggregate equity values and the adequacy of retirement saving. A simulated 40 percent decline in stocks has little effect on the adequacy of saving. The substantial growth in equity values and ownership in the 1980s and 1990s did not lead to a surge in the adequacy of retirement saving provisions. The results occur because equity holdings are concentrated among households with significant amounts of other wealth.

Suggested Citation

Engen, Eric M. and Gale, William G. and Uccello, Cori E., Effects of Stock Market Fluctuations on the Adequacy of Retirement Wealth Accumulation. Review of Income and Wealth, Vol. 51, No. 3, pp. 397-418, September 2005. Available at SSRN: https://ssrn.com/abstract=800865

Eric M. Engen

Federal Reserve Board ( email )

20th St. and Constitution Ave., NW
Washington, DC 20551
United States

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

Cori E. Uccello

American Academy of Actuaries ( email )

1850 M Street, NW
Suite 300
Washington, DC 20036
United States

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