How Exposed Are Retirement Savings to Market Risk?

The brief’s key findings are:

• When COVID-19 emerged earlier this year, the stock market fell by 35 percent in one month. While the market has largely recovered since, it remains very volatile.
• Market shocks are a growing concern to the more than half of U.S. households who now own equities, mainly due to the shift from traditional pensions to 401(k) plans.
• For most households, 401(k)/IRA assets are their largest financial asset – other than Social Security – which puts them at risk from market downturns.
• The time may have come to consider some type of risk sharing for employer plans so that individuals do not shoulder the full burden.