ESOPs and Retiree Wealth: Evidence from the Health and Retirement Study

Key Findings

• Depending on the wealth measure considered, the estimates suggest that ESOP participants have about double the retirement wealth of otherwise similar non- ESOP individuals.
• The results are broadly similar even when the sample was subdivided by retiree age.
• ESOP wealth is somewhat more equally distributed among ESOP vs. non-ESOP participants.

Have you wondered what impact ESOPs have on wealth in retirement?

Do ESOPs influence wealth inequality among retirees?

Great questions – and the Employee Ownership Foundation is helping provide some answers.

In its continuing partnership with the Rutgers School of Management and Labor Relations, the Employee Ownership Foundation would like to share some recent research titled “ESOPs and Retiree Wealth: Evidence from the Health and Retirement Study” by Matt Mazewski, Ph.D. This study appears to be the first to estimate the impact of ESOP participation on retiree wealth using a federally funded dataset that follows ESOP participants from work into retirement.

Using data from the 2008-2018 waves of the Health and Retirement Study, a large biennial survey of Americans over the age of 50, the research finds that retirees who, in their past work lives ever reported participating in an ESOP, have significantly greater wealth in retirement than non-ESOP retirees, even after accounting for their pre-retirement earnings and demographic characteristics.

These findings are probably not surprising to those who have been involved or tracking ESOPs for years. However, knowing this could be useful in several ways.
Now that you know --

Could this research help reassure employee owners at your ESOP about their financial future?

Or maybe it can help you attract and retain the best talent in a competitive labor market?

Maybe this research can help you convince a founder to sell to an ESOP?

To access the full 6-page research brief, click here and you can go here for more research and information supported by the EOF that can help you promote employee ownership, strengthen your company, and support employee owners.