How Do Responses to the Downturn Vary by Household Characteristics?

The stock market crash eliminated more than $2 tril­lion in wealth held in defined contribution retirement accounts, about one-third of the pre-crash total. Un­less offset by a later retirement age and/or increased retirement saving, this wealth shock will significantly reduce the retirement incomes of workers now ap­proaching retirement – cohorts who will depend primarily on 401(k) balances once they stop working. To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the 2009 Retirement Survey in July-August 2009. This brief is the second of four based on this nationally-representative survey of workers aged 45-59 who had substantial retirement assets prior to the downturn.1 The first brief described the Survey and highlighted the inclusion of numerous financial, employment, and behavioral factors that are omitted from other surveys.2 This brief explores the relationship between these factors and worker responses to the downturn. The first section provides a brief overview of the responses – work longer, save more, or both – and the remaining sections describe the empirical analysis conducted for each response.