Keywords: 401(k), social security, financial education, saving
Abstract: Participants in 401(k) plans are more likely than other workers to list
"retirement" as their main reason for saving, to hold individual retirement
accounts and to invest in the stock market. There are two possible reasons
for these differences: (1) workers who like to save choose to participate in
the program; or (2) 401(k) participation educates workers about investing. I
disentangle these explanations using the 1983-1989 Survey of Consumer Finances.
I find that 401(k) participants have a greater interest in saving for retirement than
other workers, suggesting that extrapolating from their saving behavior to that of the
workforce at large could be misleading. 401(k) participation also appears to increase
awareness of retirement saving, but the gains are largest among workers who already
prioritize retirement saving.
Full paper (76 KB PDF)
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Last update: August 5, 2002