Market shocks are a growing concern to more than half of U.S. households who now own equities, mainly due to the shift from traditional pensions to 401(k) plans, according to a new Issue Brief published by the Center for Retirement Research at Boston College.
During the February to March period, the value of equities in employer-sponsored retirement plans and household portfolios fell by $14.2 trillion. Of that decline, $4.4 trillion occurred in 401(k)s and Individual Retirement Accounts (IRAs), $1.8 trillion in public and private defined benefit plans, and $8.0 trillion in household non-retirement assets.
“For most households, 401(k)/IRA assets are their largest financial asset – other than Social Security – which puts them at risk from market downturns,” says the Issue Brief’s authors.
The authors conclude that the time may have come to consider some type of risk sharing for employer plans so that individuals do not shoulder the full burden. Read the full report.