January 14, 2010
Featured Topics:
Retirement Security and the Stock Market Crash
This paper simulates the impact of the 2008 stock market crash on future retirement savings under alternative scenarios. If stocks remain depressed as after the 1974 crash, 20 percent of preboomers (born 1941-45) and 22 percent of late boomers (born 1961-65) would see their retirement incomes drop 10 percent or more. Working another year would reduce the share of these big losers to 14 percent for late boomers. Delaying retirement would disproportionately benefit low-income people because their additional earnings would exceed their stock market losses. (Discussion Paper | Related Brief | TaxVox Blog)
Revitalizing Social Security: Effectively Targeting Benefit Enhancements for Low Lifetime Earners and the Oldest Old
In her testimony before the Senate Special Committee on Aging, Melissa Favreault argues that Social Security benefits for long-term low-wage workers are modest and need to be increased. There are many ways to bolster benefits for low-income retirees, each with strengths and weaknesses. Certain provisions may be more or less desirable depending on a package's other components. Some low-income older and disabled Americans are beyond Social Security's reach. To help them, Congress should consider expanding the Supplemental Security Income program. (Testimony)
Autoenrollment and Employer Contributions
Many employers match employee contributions to 401(k) plans. However, the employer's cost of continuing this practice may increase rapidly as automatic enrollment boosts employee participation. In a sample of large 401(k) plans, match rates are about 7 percentage points lower among firms with automatic enrollment than among those without it, even controlling for firm characteristics. (Discussion Paper | Related Brief)
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