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Retirement Plan Wealth Inequality: Measurement and Trends

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Abstract

Using Health and Retirement Study data linked to summary plan descriptions and W-2s, this study reports trends in retirement wealth inequality of older employees 1992-2010. The study identifies and corrects methodological flaws in past research. Retirement wealth is highly unequally distributed; the top lifetime earnings quintile holds half of all retirement wealth, the bottom quintile, only 1 percent. The top earnings quintile fared better in 2010 than in 1992, whereas bottom-quintile earners fared worse. But retirement wealth inequality mainly reflects inequality within earnings quintiles, resulting from inadequate savings, not outsize accumulations. Systemic flaws reduce median retirement wealth by 84 percent.

Suggested Citation

  • Teresa Ghilarducci & Siavash Radpour & Anthony Webb, 2019. "Retirement Plan Wealth Inequality: Measurement and Trends," SCEPA working paper series. 2019-01, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2019-01
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    References listed on IDEAS

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    1. Ghilarducci, Teresa & Saad-Lessler, Joelle & Reznik, Gayle, 2018. "Earnings volatility and 401(k) contributions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(4), pages 554-575, October.
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    9. Cunningham, Christopher R. & Engelhardt, Gary V., 2002. "Federal Tax Policy, Employer Matching, and 401(K) Saving: Evidence From HRS W-2 Records," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(3), pages 617-645, September.
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    11. Teresa Ghilarducci & Michael Papadopoulos & Wei Sun & Anthony Webb, 2017. "“Catch-Up Contributions†An Equitable and Affordable Solution to the Retirement Savings Crisis," SCEPA working paper series. 2017-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
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    More about this item

    Keywords

    retirement; wealth; inequality;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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