TY  - JOUR
AU  - Samwick,Andrew A.
AU  - Skinner,Jonathan
TI  - How Will Defined Contribution Pension Plans Affect Retirement Income?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6645
PY  - 1998
Y2  - July 1998
UR  - http://www.nber.org/papers/w6645
L1  - http://www.nber.org/papers/w6645.pdf
N1  - Author contact info:
Andrew Samwick
6106 Rockefeller Hall
Department of Economics
Dartmouth College
Hanover, NH 03755-3514
Tel: 603/646-2893
Fax: 603/646-2122
E-Mail: andrew.samwick@dartmouth.edu

Jonathan S. Skinner
Department of Economics
6106 Rockefeller Hall
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2535
Fax: 603/646-2122
E-Mail: jonathan.skinner@dartmouth.edu
AB  - How has the emergence of defined contribution pension plans, such as 401(k)s, affected the financial security of future retirees?  We consider this question using a detailed survey of pension formulas in the Survey of Consumer Finances.  Our simulations show that average and median pension benefits are higher under defined contribution plans that for defined benefit plans.  Defined benefit plans are slightly better at providing minimum benefits, but for plausible values of risk aversion, a defined contribution plan drawn randomly from those available in 1995 is still preferred to a defined benefit plan drawn randomly from those available in 1983.  This result is robust to different assumptions regarding the spending of defined contribution balances between jobs, equity rates of return, and the date of retirement.  In short, we suggest that defined contribution plans can strengthen the financial security of retirees.
ER  -