Lifetime Patterns of Voluntary Employee Pension Contributions

As defined contribution plans have come to dominate the pension landscape, retirement security increasingly depends on employees ’ willingness to defer current consumption and save for old age. Unlike with tradi-tional defined benefit plans, most employers that pro-vide defined contribution plans do not automatically save on workers ’ behalf. Workers offered defined con-tribution plans must decide whether to participate, and how much to set aside from each paycheck for invest-ment. Future retirement benefits will depend on partic-ipants ’ and employers ’ pattern of contributions and the returns earned by the contributions. Families must generally set aside funds over many years to accum-ulate significant retirement savings in their defined contribution plans