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PENSION CONTRIBUTIONS, PENSION AWARENESS, AND CHANGING PERSONAL FINANCES
Author(s) -
Lay Margaret J.
Publication year - 2019
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12420
Subject(s) - pension , earnings , margin (machine learning) , business , health and retirement study , actuarial science , economics , labour economics , demographic economics , public economics , finance , medicine , gerontology , machine learning , computer science
Workers with 401(k)s and similar defined contribution pensions adjust contributions facing large fluctuations in personal finances. Using administrative tax records linked to the Health and Retirement Study, this paper shows that adjustments differ for contributors who are aware and unaware of their pension coverage. Unaware contributors are more likely to stop contributing facing deteriorating finances, but adjust contributions similarly along the intensive margin. For example, 25% of unaware contributors stop contributing facing earnings declines, but only 15% of aware contributors do so. These findings have implications for policies like automatic enrollment and information campaigns that encourage retirement savings. ( JEL D14, J14, J32, D83)