Precautionary Liquidity and Retirement Saving
AEA Papers and Proceedings
vol. 112,
May 2022
(pp. 147-50)
Abstract
Precautionary demand for liquidity manifests itself as a preference for holding assets in an accessible form not because of any current liquidity need but because of a possible future need. We explore such demand by analyzing employer-sponsored retirement saving plans in France, where firms must offer medium-term investment vehicles that cannot be accessed for five years. Some also offer long-term vehicles that cannot be accessed until retirement. Plan take-up is lower when there is a long-term option; more workers opt out of the plan default when it includes one; and when hardship strikes, workers tend to withdraw long-term funds before medium-term funds.Citation
Briere, Marie, James Poterba, and Ariane Szafarz. 2022. "Precautionary Liquidity and Retirement Saving." AEA Papers and Proceedings, 112: 147-50. DOI: 10.1257/pandp.20221022Additional Materials
JEL Classification
- G12 Equities; Fixed Income Securities
- J26 Retirement; Retirement Policies
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions