Portfolio Theory, Life-Cycle Investing, and Retirement Income
ثبت نشده
چکیده
discussion recently about life-cycle funds and their role in providing a secure retirement income for older Americans. These funds, which gradually shift account assets from broad-based stock funds to bond funds as a participant ages, are becoming an important vehicle for retirement savings. This policy brief explores the economic rationale behind the life-cycle approach and the advantages and limitations of life-cycle funds. Introduction
منابع مشابه
The Rodney L. White Center for Financial Research Saving and Investing for Early Retirement: A Theoretical Analysis
We study optimal consumption and portfolio choice in a framework where investors save for early retirement and assume that agents can adjust their labor supply only through an irreversible choice of their retirement time. We obtain closed form solutions and analyze the joint behavior of retirement time, portfolio choice, and consumption. Investing for early retirement tends to increase savings ...
متن کاملSaving and investing for early retirement: A theoretical analysis
We study optimal consumption and portfolio choice in a framework where investors adjust their labor supply through an irreversible choice of their retirement time. We show that investing for early retirement tends to increase savings and reduce an agent’s effective relative risk aversion, thus increasing her stock market exposure. Contrary to common intuition, an investor might find it optimal ...
متن کاملMeans-tested income support, portfolio choice and decumulation in retirement
We investigate the impact of means tested public income transfers on post-retirement decumulation and portfolio choice using theoretical simulations and panel data on Australian Age Pensioners. Means tested public pension payments in Australia have broad coverage and give insight into the incentive responsiveness of well-o¤, as well as poorer households. Via numerical solutions to a discrete ti...
متن کاملDoes Investment Skill Deteriorate With Age?∗
This study focuses on the stock investment choices of older investors. Consistent with the theoretical predictions of life-cycle and learning models, we find that older investors hold less risky and better diversified stock portfolios, and their choices reflect greater knowledge about investing. However, consistent with the psychological evidence on cognitive aging, we also find that older inve...
متن کاملMarket Risk, Mortality Risk, and Sustainable Retirement Asset Allocation: A Downside Risk Perspective
Despite its clear importance, there is no consensus on the optimal asset allocation strategy for retirement investors of varying age, gender, and risk tolerance. This study analyzes the allocation question by focusing on the downside risks that result from the joint uncertainty over investment returns and life expectancy. Using a new analytical approach, we show that concentrating on the severi...
متن کامل