The Automatic Stabilizing Effects of Social Security and 401 (k) Plans
Authors: Teresa Ghilarducci, Joelle Saad-Lessler and Eloy Fisher
Date: December 2011
As the first-ever comparative study of how large pension institutions impact the long-term business cycle, the study compares the effects of Social Security against market-based retirement vehicles such as 401(k) plans. It finds that 401(k) plans magnify the effects of the recession by de-stabilizing the economy. In fact, they significantly undermine the benefits of other stabilizing programs by 15%, including the federal income tax, unemployment insurance, and Medicare and disability insurance.