Earlier this year Vanguard conducted a study to determine how defined contribution (DC) participants behaved in 2008. One of their conclusions is that inertia played a dominant role in retirement decision-making. Despite historic volatility in equity markets, a global financial crisis and a severe economic downturn, DC plan participants reacted only marginally in terms of trading, contributions, and distribution behavior. The fact that only 2% of active participants sold all of their equity holdings is evidence of a “stay-the-course” or “path-of-least-resistance” approach.
Please click here for the Vanguard study.