Have 401(k)s Raised Household Saving? Evidence from the Health and Retirement Study

The 401(k) pension plan has become the most widespread retirement saving plan since its creation in 1978. At the same time there has been a great deal of debate over the amount that this plan actually effects the financial savings of a household. In this article it is believed that there are fundamental biases in estimating saving effects because of the many ways of saving. After going over numerous studies dealing with 401(k) plans effects on savings, the author thoroughly discusses evidence from the first wave (1992) of the Health and Retirement Study. By way of in-depth analysis it is concluded that 401(k) plans have little effect on a households saving. Only in lower-to-middle income households is saving likely to be widely effected by 401(k) plans.