From the July 2007 issue of Boomer Market Advisor • Subscribe!

401(k) assets expected to grow

The effect of boomer retirement on the health of the overall market is a topic of continued debate. Some predict a catastrophic bear market as boomers begin to draw down assets. Other say it will have little effect, due to the fact that the rate of perhousehold asset accumulation remains low.

A new working paper from the National Bureau of Economic Research, entitled "New Estimates of the Future Path of 401(k) Assets," hopes to shed light on the topic. Despite a sizable potential liquidation, the paper concludes the total assets in 401(k)s will grow significantly. The authors note that at present, 401(k) assets comprise a relatively small amount of household wealth, and have only been available for two decades. Now that 401(k)s are increasingly available to a majority of American workers, younger boomers will have more time to accumulate 401(k) wealth, which will fuel the predicted growth.

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