Set it and Forget it? Financing Retirement in an Age of Defaults
Abstract: Retirement savings abandonment is a rising concern connected to defined contribution systems and default enrollment. We use tax data on Individual Retirement Accounts (IRAs) to establish that for a recent cohort, 0.4% of retirement-age individuals abandoned an aggregate of $66 million, proxied by a failure to claim over ten years after a legal requirement to do so. Analysis of state unclaimed property databases suggests that workplace defined contribution plans are abandoned at a higher rate than IRAs. Finally, regression discontinuity estimates show that certain accounts created by default enrollment are at higher risk of abandonment by passive savers.
File(s): File format is application/pdf https://doi.org/10.21033/wp-2022-50
Provider: Federal Reserve Bank of Chicago
Part of Series: Working Paper Series
Publication Date: 2022-10-19
Number: WP 2022-50