Workers in Defined-Contribution Plans Retire Later

August 2004
Journal of Financial Planning;Aug2004, Vol. 17 Issue 8, p18
Academic Journal
Workers in defined-contribution retirement plans retire two years later on average than workers in defined-benefit plans, according to a study by Leora Friedberg and Anthony Webb. The authors attribute much of the difference to the fact that pension wealth accrues better in a defined-contribution plan than in a defined-benefit plan, while pension wealth increase at older ages, followed by incentives encouraging retirement after a certain point. The percentage of full-time employees with defined-benefit plans rose from 40 percent in 1983 to 79 percent in 1998, while employees covered by defined-benefit plans declined from 87 percent to 44 percent during the same period.


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