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Andrea Coombes’ Ways and Means: Why 401(k)s are bad for people without a college degree

The decimation of the traditional pension system and the rise of the 401(k) has posed challenges for many U.S. savers, but new research suggests that people without college degrees are the worst off under the changing system and may face growing income inequality in retirement.

Certainly, people with a college degree are likelier to earn more money and likelier to have access to a retirement savings plan — two factors that go a long way in explaining why they are likelier to save, and save more — than people without a college degree.

But, in addition to those two factors, getting a college degree correlates with the very behaviors that align with the best savings habits, including a willingness to make sacrifices for future goals, according to a working paper to be presented Tuesday to the American Sociological Association at its annual meeting, in Seattle.

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