Returns on 401(k) Assets by Cohort
by Alicia H. Munnell and Jean-Pierre Aubry
March 2010
IB#10-6
Introduction
The impact of the financial crisis on the retirement savings of the Early Baby Boomers has received considerable attention. Indeed, from the peak of the market in 2007 to the trough in March 2009, these Early Boomers lost a lot of money – $1 trillion. But they have already recovered roughly half of these losses with the ensuing rebound in the equities market, and those with balanced portfolios may have recovered fully. More important, over their full working careers, the Early Boomers have actually been treated quite well by the financial markets, measured against two benchmarks: lifetime returns on retirement assets and the experience of the Late Boomers and Generation Xers. The cohort at the greatest risk appears to be the Late Boomers, who have experienced a less favorable investment environment over their careers and will need extraordinary returns just to end up as well off as the Early Boomers are today. Generation Xers, given their shorter careers, have faced the worst environment, but they have more time to catch up...
For full brief
Alicia H. Munnell is the director of the Center for Retirement Research at Boston College (CRR) and the Peter F. Drucker Professor of Management Sciences at Boston College's Carroll School of Management. Jean-Pierre Aubry is a research associate at the CRR. The authors wish to thank Charles Stein for asking the question and Steven Utkus for very helpful comments.