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Title:Is the equalizing effect of retirement wealth wearing off? PDF Logo
Authors:Wolff, Edward N.
Issue Date:2005
Series/Report no.:Working papers // The Levy Economics Institute 420
Abstract:Retirement wealth is often viewed as a great equalizer, offsetting the inequality in standard household net worth. One of the most dramatic changes in the retirement income system over the last two decades has been a decline in traditional Defined Benefit (DB) pension plans and a sharp rise in Defined Contribution (DC) pensions. Using data from the Federal Reserve Board's Survey of Consumer Finances, I find that retirement wealth (the sum of pension and Social Security wealth) had a considerably weaker offsetting effect on wealth inequality in 2001 than in 1983. Whereas standard net worth inequality increased modestly between 1983 and 2001, the inequality of augmented wealth (the sum of retirement wealth and net worth) surged from 1983 to 2001, very much in line with income inequality. Moreover, whereas median net worth climbed substantially from 1983 to 2001, median augmented wealth actually fell over this period.
Subjects:Pensions
Social Security
Wealth
Inequality
JEL:J32
D31
H55
Document Type:Working Paper
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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