
Contents
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8.1 Optimal Age-Dependent Asset Allocation Rules and the Rise of Life-Cycle Funds 8.1 Optimal Age-Dependent Asset Allocation Rules and the Rise of Life-Cycle Funds
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8.2 Modeling Retirement Wealth Accumulation in Self-Directed Retirement Plans 8.2 Modeling Retirement Wealth Accumulation in Self-Directed Retirement Plans
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8.3 Calibration of PRA Wealth Simulations 8.3 Calibration of PRA Wealth Simulations
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8.4 Discussion of Results 8.4 Discussion of Results
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8.4.1 The Distribution of Retirement Wealth 8.4.1 The Distribution of Retirement Wealth
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8.4.2 Expected Utility of Retirement Wealth 8.4.2 Expected Utility of Retirement Wealth
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8.5 Conclusions 8.5 Conclusions
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References References
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Comment - Douglas W. Elmendorf Comment - Douglas W. Elmendorf
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The Equity Premium The Equity Premium
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Time Varying Equity Shares Time Varying Equity Shares
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Time Variation in Asset Returns Time Variation in Asset Returns
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Mutual Fund Expenses Mutual Fund Expenses
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8 Reducing Social Security PRA Risk at the Individual Level: Life-Cycle Funds and No-Loss Strategies
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Published:June 2009
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Abstract
This chapter explores the implications for asset accumulation of different investment strategies. In a Social Security system with a personal retirement account (PRA) component, retirement savers would have to decide how to allocate their PRA portfolios across a broad range of asset classes and financial products. Asset allocation decisions have important consequences for retirement wealth accumulation because they affect the expenses of investing as well as the risk of low returns. The goal of this study is to assess the relative risk associated with alternative asset allocation strategies in PRAs, though it also offers insight on the consequences of different asset allocation rules in 401(k)-type plans.
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