Retirement saving has changed dramatically over the last two decades. There has been a shift from employer-managed defined benefit pensions to defined contribution retirement saving plans that are largely controlled by employees. Today, about 85 percent of private contributions are to personal retirement accounts. The concentration of retirement saving in personal accounts raises many questions about the risk associated with these plans and the effect of asset price fluctuations on individual choices. The proposed analysis under this subproject will evaluate the trends in the risk exposure of households, in light of the rapid transition from employer-provided DB plans to personal retirement accounts. In particular, the analysis will consider the risk associated with company stock in personal retirement accounts, and will compare the financial market risk of personal retirement accounts to the job-change risk of traditional employer-provided DB plans. In pursuing the evaluation of risk, the project will consider alternative methods of measuring and reporting risk. The proposed analysis will also direct attention to the effect of financial market fluctuations on the participation in and contributions to personal retirement accounts, on the retirement decision, and on the home downsizing decision of older households. Finally, the analysis will evaluate the effect of recent tax law changes on the participation in and the contributions to personal retirement accounts.
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