What Is at Stake When Determining Lifetime Asset Allocation?**

This paper examines the effects of deviating from the optimal life-cycle asset allocation. The magnitude of likely deviations is gauged through an analysis of differences between available life-cycle funds. The motivation is that due to search costs, the complexity of the decision problem and other factors, an investor may choose a fund with asset allocation profile A even though profile B would be optimal. The associated utility losses are quantified using a model of lifetime consumption and portfolio choice. The results suggest that utility losses are modest. In many cases, they are smaller than the utility loss which arises if the return on financial assets is reduced by 0.3% per annum. The results help to focus on the most important decisions when saving for retirement, and to balance the costs and benefits of customising saving products.