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401(k) Investment Decisions and Social Security Reform

March 1, 2000
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Working Paper by Cori E. Uccello

Abstract

This paper uses the 1995 Survey of Consumer Finances to show that 401(k) participants with an underlying defined benefit plan are more likely to invest in equities than are participants whose 401(k) is their primary plan, suggesting that workers with a guaranteed source of retirement income are more likely to invest their other retirement assets more aggressively. Removing this guarantee might result in more conservative investment. Therefore, using current 401(k) asset allocation behavior to project income under a Social Security individual account system with reduced guaranteed benefits could overstate returns to these accounts, thus overstating their attractiveness relative to the current system.

Business concept of financial growth and coin savings. Future investment planning and retirement. Trees stacked on coins
Business concept of financial growth and coin savings. Future investment planning and retirement. Trees stacked on coins
Author(s)
Headshot of Cori E. Uccello
Cori E. Uccello
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Citation

Uccello, Cori E. 2000. "401(k) Investment Decisions and Social Security Reform" Working Paper 2000-4. Chestnut Hill, MA: Center for Retirement Research at Boston College.

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Other Project Publications
  • Working Paper
Associated Project(s)
  • BC00-10
Topics
Social Security
Publication Type
Working Paper
Publication Number
WP#2000-4
Sponsor
U.S. Social Security Administration
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