The booms and busts of the late 1990s and 2000s have taken 401(k) plan participants on a rollercoaster ride. Using administrative tax records and household surveys, we examine how participants responded to these periods of economic expansions and contractions by documenting changes in 401(k) participation, contributions, and contribution rates from 1990 to 2009. Controlling for earnings, job changes, and other household factors, we find that workers reduce their 401(k) participation and contributions during recessions. Changes in participant behavior during the Great Recession, in particular, could lower 401(k) assets of the typical 30-year-old by as much as 8% at age 62.
Copyright © Cambridge University Press 2014.
Note: This report is also available on Cambridge Journals Online.