Horneff, VanyaMaurer, RaimondMitchell, Olivia S2023-05-232023-05-232018-10-022019-02-06https://repository.upenn.edu/handle/20.500.14332/43572Many believe that global capital markets will generate lower returns in the future versus the past. We examine how persistently lower real returns will reshape work, retirement, saving, and investment behavior of older persons using a calibrated dynamic life cycle model. In a low return regime, workers build up less wealth in their tax-qualified 401(k) accounts versus the past, claim social security benefits later, and work more. Moreover, the better-educated are more sensitive to real interest rate changes, and the least-educated alter their behavior less. Interestingly, wealth inequality is lower in periods of persistent low expected returns.Opinions and any errors are solely those of the authors and not of the institutions with which the authors are affiliated, or any individual cited. © 2018 Horneff, Maurer, and MitchellG11, G22, D14, D91401(k) plan; saving; investmentSocial Security claiming; retirement; tax consequencesBehavioral EconomicsWorking Paper