Determinants of Couples' Defined Contribution Retirement Funds

Abstract

The study examined factors associated with the amount of defined contribution retirement funds using the 1992 Survey of Consumer Finances. Couples with larger amounts of income and smaller amount of nonfinancial assets had larger amounts of defined contribution funds. Also, the funds increased as years of employment and employer contribution rate increased. Households with lower levels of education, less skilled occupations, and with respondents who were unwilling to take financial risks, or who were Black and Hispanic had smaller amounts of defined contribution funds, all other things equal. Most households 30 or more years from retirement had predicted fund levels of zero. KEY WORDS: defined contribution plan, pensions, retirement, savings Social Security and private pensions are the most important sources of retirement income. For all private sector pensioners who also receive Social Security benefits, the median wage replacement rates are 25 % and 37 % for private pension and Social Security respectively. The combined replacement rate is 67 % (U.S. Department of Labor, 1995). Private pension plans can be classified

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