IX. Results

S. discussed contribution arrangements. DC retirement profile symbolizing a growing tiny fraction folks home wealth are being utilized by personnel to help you each other money dated-ages old age defense, in order to assist safety most recent consumption demands. The master plan mortgage function is one of the preferred yet , understudied pre-later years exchangeability top features of 401(k) arrangements.

It report have browsed the results away from employer bundle financing policy, and we also finish financing framework can and does have an economically important influence on new member borrowing. Within our dataset, one-fifth away from bundle people got a loan at one time, when you are almost 40 percent did therefore over a beneficial four-year period. Members just who lent alot more was indeed and additionally apt to be more youthful and you may liquidity-limited, in keeping with a beneficial lifecycle make of saving and you will borrowing. Yet conditional on borrowing from the bank, it actually was high earnings/wide range members whom lent big portions of their 401(k) account.

Over 2 decades before, Nobel Honor winner Franco Modigliani complex a method having giving 401(k) handmade cards for the purpose of developing it more convenient for gurus so you can withdraw using their retirement account to fund brief-identity practices means (Vise, 2004)

Employer-determined plan mortgage coverage and additionally got a content influence on credit choices. [Read more…]