Retirement Security and the Stock Market Crash: What Are the Possible Outcomes?

by Barbara A. Butrica, Karen E. Smith, and Eric J. Toder

November 2009

WP#2009-30

Abstract

This paper simulates the impact of the 2008 stock market crash on future retirement savings under alternative scenarios. If stocks remain depressed as after the 1974 crash, 20 percent of pre-boomers born 1941-45 and 22 percent of late boomers born 1961-65 would see their retirement incomes drop 10 percent or more. Working another year would reduce the share of these big losers to 14 percent for late boomers. Because most pre-boomers were already retired, their share of big losers would decline slightly, to 19 percent. Delaying retirement would disproportionately benefit low-income people because their additional earnings exceed their stock market losses.

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For full paper in PDF

Barbara A. Butrica is a senior research associate at the Urban Institute.  Karen E. Smith is a senior research associate at the Urban Institute.  Eric J. Toder is a senior fellow at the Urban Institute.
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