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What Does the Market Crash Mean for the Ability of 401(K) Plans to Provide Retirement Income?

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  • Brady, Peter J.

Abstract

Deteriorating financial market conditions in 2008 intensified the debate over the ability of 401(k) plans to provide retirement income. This paper simulates the effects of the market crash of 2008 for 401(k) plan participants of various ages, earnings levels, and portfolios. Because Social Security is such an important component of retirement income, focusing solely on 401(k) balances can overstate the effect of the market crash. Most workers with low to moderate earnings are projected to have only moderate reductions in retirement income. In many cases the change in retirement income would be more than offset by working an additional year.

Suggested Citation

  • Brady, Peter J., 2009. "What Does the Market Crash Mean for the Ability of 401(K) Plans to Provide Retirement Income?," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(3), pages 455-476, September.
    • Handle: RePEc:ntj:journl:v:62:y:2009:i:3:p:455-76
    DOI: 10.17310/ntj.2009.3.07
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    File URL: https://doi.org/10.17310/ntj.2009.3.07
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    Cited by:

    1. Chai, Jingjing & Maurer, Raimond H. & Mitchell, Olivia S. & Rogalla, Ralph, 2011. "Lifecycle impacts of the financial and economic crisis on household optimal consumption, portfolio choice, and labor supply," CFS Working Paper Series 2011/23, Center for Financial Studies (CFS).
    2. Peter J. Brady, 2012. "Can 401(k) Plans Provide Adequate Retirement Resources?," Public Finance Review, , vol. 40(2), pages 177-206, March.

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