Are Empowerment and Education Enough? Underdiversification in 401(k) Plans
- 1 January 2005
- journal article
- research article
- Published by Project MUSE in Brookings Papers on Economic Activity
- Vol. 2005 (2) , 151-213
- https://doi.org/10.1353/eca.2006.0002
Abstract
At the end of 2000, current and former employees of the energy trading company Enron Corporation held $2.1 billion in the firm's 401(k) retirement savings plan. Sixty-two percent of that money was invested in Enron stock, then trading at $83 a share. In October 2001 Enron's finances began to unravel as its accounting improprieties came to light. Enron stock plummeted over the next several weeks, and on December 2, 2001, the company declared bankruptcy, rendering its shares worthless. Thousands of Enron employees lost their jobs and a large fraction of their retirement wealth simultaneously.Keywords
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