Coming Up Short: The Challenge of 401(k) Plans

Book Description
As the baby boom begins to withdraw from the labor force, ensuring a secure retirement income becomes an increasingly important issue, the number of people over age 65 is expected to double by 2030. That trend will continue, accompanied by worries about stock market volatility, corporate malfeasance, a rapidly changing economy, and the viability of Social Security. In Coming Up Short, two experts on retirement policy analyze 401(k) plans, the fastest-growing type of employer-sponsored pensions and a vital source of retirement income for the American middle class. Alicia Munnell and Annika Sunden chronicle the development of 401(k) plans, now the dominant form of private pensions. In accessible language, they explain how such plans work and discuss their popularity. For employees, these plans are appealing becuase they have more control over their own retirement funds, and the plans are portable. For employers, the plans are generally less costly than defined benefit plans. Despite those advantages, there are some significant downsides to 401(k) plans. These plans shift all the risk and responsibility to employees, who must decide whether to join, how much to contribute, how to invest, whether to "cash out" when changing jobs, and how to manage their nest egg in retirement. These are difficult decisions, and while in theory 401(k)s could be an effective savings vehicle for retirement, in practice many people make mistakes at every step along the way. Coming Up Short discusses why these mistakes are made and proposes various reforms to ensure that the aging population will have adequate retirement income. Comprehensive and up-to-date, Coming Up Short is an essential resource on 401(k) plans for financial service professionals, policymakers, academics, and individuals planning for their own retirement.


About the Author
Alicia H. Munnell is the Peter F. Drucker Professor in Management Sciences at Boston College’s Carroll School of Management and director of the Center for Retirement Research at Boston College. Annika Sundén is the a research associate at the Center for Retirement Research at Boston College and a senior economist at the Swedish National Social Insurance Board.


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A resource for financial service professionals, policymakers, academics, and individuals planning for their retirement. Noting that employees often have to make difficult financial decisions but lack the resources to make wise choices, pension experts Munnell (who directs the Center for Retirement Research at Boston College) and Sundén (affiliated with Boston College and the Swedish National Social Insurance Board) evaluate the challenges posed by 401(k) plans—the primary private retirement income vehicle in the US. They look at the trends that are leading many employees to make mistakes every step of the way, and suggest ways to strengthen 401(k) plans that would help the plans do the job they're supposed to do. Annotation ©2004 Book News, Inc., Portland, OR


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