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Key Findings Details

How Do Pension Changes Affect Retirement Preparedness? The Trend to Defined Contribution Plans and the Vulnerability of the Retirement Age Population to the Stock Market Decline of 2008-2009
Alan L. Gustman, Thomas L. Steinmeier and Nahid Tabatabai
WP 2009-206

  • The average person in their mid fifties is not likely to suffer a life changing financial loss from the stock market downturn of 2008-2009.
  • Almost two-thirds of their pension wealth was held in defined-benefit plans (with only 15 percent invested in stocks) and one-quarter of their pension wealth consisted of future Social Security benefits.
  • If workers postpone retirement due to their stock market losses in 2008-2009, we estimate that 9 percent will delay retirement by 1-2 years, but the average person will delay it for a only few months.
  • However, increases in the number of job losses may force some people to retire sooner than planned, which may result in more earlier retirements overall.
  • More women approaching retirement are covered by a pension than in past years and they account for a significantly larger share of household wealth.