b'CHAPTER 5 | TRACKING THE IMPACT OF THE GREAT RECESSIONsource of pension wealth. Overall, only 15.2% ofportfolios are held in DC plans. Gustman et al.Effects on Retirement Expectationstheir wealth was held in equities through defined(2014) report that in 2012, DC plans for the firstLarge wealth losses could cause individuals who contribution (DC) plans, individual retirementtime represented a larger share of pension wealthare nearing retirement age to continue working in accounts (IRAs), and direct stock holdings.than DB plans, but only for Mid Baby Boomersorder to offset their losses. Gustman et al. (2010) Similarly, while housing values fell substantiallywho were aged 53 to 58 in that year. Nonetheless,show that, as a result of the economic downturn, through the recession, many homeowners in thisSocial Security is the most important asset ownedabout 7% of those near retirement in 2006 are cohort had already paid off their mortgages orby members of all of the cohorts examined andlikely to delay retiring by a year, and almost already held substantial equity, and therefore didis a major source of stability through economic2% are likely to delay retirement by two years. not find themselves under water with a mortgagechange. Another study examines changes in expected lender.Other research examines mental healthretirement age over the course of the recession With longitudinal information on wealtheffects of wealth losses. Similar to Gustman andfrom 2006 to 2008 (Goda et al. 2011). These changes during the recession, researchers showcolleagues, McInerney et al. (2013) find largeresearchers map the date of the HRS interview to that for the Early Baby Boomers, by 2010 realrecession-related wealth losses among those withthe value of the S&P 500 (an index of the value wealth had fallen by 2.8% (Gustman et al. 2012).high levels of stock holdings. They also showof the stock market), to quarterly fluctuations Early Baby Boomers with the lowest levels ofthat these losses are associated with increasedin the housing market at the state level, and to wealth experienced a 1% wealth loss. On the othersymptoms of depression and use of antidepres- county-level unemployment rates during the hand, those with the highest levels of wealthsant drugs. On average, older Americans percep- month of the interview. Expectations about likely lost the most during the recession. In follow-uptions of financial strain actually lessened overretirement are influenced by these economic indi-work, Gustman et al. (2014) study the effect ofthe recession between 2006 and 2010, with 41%cators. Between 2006 and 2008, the percentage of the economic recovery on the wealth of Americanof respondents indicating a decrease in financialworkers expecting to work past age 62 increased households. For Early Baby Boomers overall, bystrain over the four-year period (Wilkinsonfrom 47.5 to 54.5%, and those expecting to work 2012when they were aged 59 to 64real2016). Nonetheless, a quarter of HRS participantspast age 65 increased from 31.1 to 36.6%. wealth was still 3.6% lower than before the 2006experienced increased financial strain during thatA 2009 HRS survey assessed response to recession. They show that the largest percentageperiod, leading to worsening anxiety and depres- the economic downturn. Hurd and Rohwedder wealth losses are in the highest wealth house- sive symptoms. (2010c) compare expectations of working past holds. In the top wealth decile the decrease fromFigures 5-1a and 5-1b show the impact of theage 62 for those who are over age 55 and working 2006 to 2012 is 26%, whereas the lowest decilerecession reported by HRS respondents in 2009.in 2008 based on their work status in 2009. actually experienced an increase in wealth.Impacts of the recession appear to be similar forFor those still working in 2009, the subjective Comparing the experiences of these youngermen and women, but are more strongly felt byexpectation of working past age 62 increased by cohorts to older cohorts, they also find that realyounger age groups. 5%. The numbers are even more striking for wealth increased in earlier cohorts at the same age (for example War Babies who were aged 51 to 56 in 1998), largely due to increases in theYounger cohorts being followed in the HRS will have housing and stock markets in the 1990s andgreater exposure to stock markets as an increasing share early 2000s. Younger cohorts being followed in the HRS will have greater exposure to stockof their retirement portfolios are held in DC plans.markets as an increasing share of their retirement 85'