Tuesday, July 7, 2015

New issue brief: “Do Catch-Up Contributions Increase 401(k) Saving?”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Do Catch-Up Contributions Increase 401(k) Saving?”
by Qi Guan, Matthew S. Rutledge, April Yanyuan Wu, and Francis M. Vitagliano

The brief’s key findings are:
  • To encourage Americans to save more for retirement, some suggest raising 401(k) contribution limits. 
  • To assess such an option, this analysis estimates the effects of a 2001 increase in 401(k) limits that also introduced a higher “catch-up” limit for those 50 and over.
  • The increase in the limits did boost contributions in 2002-05, but only for those near the prior limits, particularly those eligible to make catch-up contributions.
  • Since few participants – only about 10 percent – are constrained by the limits, raising them does not offer a broad-based solution for low saving rates.
This brief is available here.

1 comment:

JoeTheEconomist said...


Insurance is a better way to manage the cost of the unknown. It is frightening to see what politicians suggest. They either don't understand the problem or don't care about the consequences.


The problem is that the private annuity market is too expensive for the average citizen.