A Cohort Analysis of Contribution Rate in Defined Contribution Plan



A Cohort Analysis of Contribution Rate in Defined Contribution Plan


 


Lingling Wang and Michael S. Gutter, University of Wisconsin-Madison


 


The pattern of increased prevalence of Defined Contribution
plans over Defined Benefit plans has placed greater responsibility for
retirement financial security on employees. Many studies suggest that there is
inadequate savings by baby boomers; but is this a generational question? There
has been scant research on investigating the influence of age, time, and cohort
in retirement saving behavior of boomers. Using data from 1989 and 2001 Survey
of Consumer Finances, the study examines the effect of age, cohort, and time on
contribution rate in Defined Contribution plan. Heckman’s two-step procedure is
used in this study.