Financing Retirement: The Private Sector

Wise, David A.
April 2006
Business Economics;Apr2006, Vol. 41 Issue 2, p14
Academic Journal
Since 1980, there has been a rapid shift from employer-based, defined benefit pensions to employee-controlled personal retirement accounts. This paper documents the shift and explores the conventional wisdom that this shift increases risk for retirees and will result in lower accumulation of retirement assets. In particular, it focuses on personal retirement accounts and considers the options available for retirees to contain risk and assess the likely outcomes over alternative options, including life cycle allocations. It concludes that personal retirement accounts are likely to lead to higher retirement accumulations that are also less risky than would be the case under defined benefit plans.


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