Save & Invest

Abstract: Using a unique set of household level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over five-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets.

This paper investigates three common differences among defined contribution plans that may lead to varying degrees of information overload. We hypothesize that information overload is one reason participants in defined contribution plans often choose the default options. In two experiments, we manipulate the display of the investment information, the number of choices offered, and the similarity between the investment options offered. In addition, we measure all of the participants’ financial knowledge and include this measure as an independent variable in the study.

This paper investigates the determinants of holding different types of equities in the context of a 401(k) retirement plan. The decision of holding a given type of equity fund is related to investor characteristics and common effects.The results of this paper should be relevant for academics, in their effort to produce models that may explain or guide actual portfolio choices. The results of this paper should also be useful to policymakers, who may be concerned with the impact of a possible reform of the Social Security system on households’ finances and on financial markets.

In this report, GAO's objectives were to determine: (1) what benefit payout options and accompanying information pension plans make available to participants at retirement, (2) what benefit payouts plan participants receive at retirement, and (3) the actions available to help retiring participants preserve their pension and retirement savings plan assets. GAO found that defined benefit (DB) plans make annuities available to all participants at retirement, while defined contribution (DC) plans make lump sums available to almost all participants.

Abstract: It is well accepted that households increase consumption of goods and services in response to an unexpected increase in wealth. Consensus estimates of this wealth effect are in the range of 3 to 5 cents of additional consumption spending in the long run for each additional dollar of wealth. Economic theory also suggests that consumption of leisure, like consumption of goods and services, should increase with positive shocks to wealth. In this paper, we ask whether the run-up in equity prices during the 1990s led older workers to retire earlier than they had previously planned.

GAO was asked to report on the implications of proposals to restructure the U.S. Social Security system by using a voluntary approach to individual retirement savings accounts accounts. GAO studied three countries that have enacted voluntary.individual account plans—the Czech Republic, Germany, and the United Kingdom. GAO found that making participation voluntary has significant implications for designing and administering the plan.

Abstract: This article presents descriptive findings from new survey data on households' decisions to change or remain with their providers of checking or savings accounts. The data show that the distribution of household tenure is wide, and that about a third of households have never changed depository institutions. The primary reason reported for changing banks is a household relocation; other reasons are customer service and price factors. Customer service and location are the most frequently cited reasons for remaining with a bank.