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EFFECTS OF STOCK MARKET FLUCTUATIONS ON THE ADEQUACY OF RETIREMENT WEALTH ACCUMULATION
Author(s) -
Engen Eric M.,
Gale William G.,
Uccello Cori E.
Publication year - 2005
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2005.00160.x
Subject(s) - economics , equity (law) , stock (firearms) , stock market , labour economics , monetary economics , mechanical engineering , paleontology , horse , biology , engineering , political science , law
This paper examines the relation between fluctuations in the aggregate value of equities and the adequacy of households’ saving for retirement. Using more recent data than most studies on this topic, we find that many and perhaps most households appear to be saving adequate amounts for retirement, and that there is almost no link between aggregate equity values and the adequacy of retirement saving. A simulated 40 percent decline in stocks has little effect on the adequacy of saving. The substantial growth in equity values and ownership in the 1980s and 1990s did not lead to a surge in the adequacy of retirement saving provisions. The results occur because equity holdings are concentrated among households with significant amounts of other wealth.