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Research Details

UM05-14 - Savings, Portfolio Choice, and Retirement

Arthur van Soest and Arie Kapteyn

Household investment decisions crucially determine the consequences of personal accounts and the adequacy of Social Security and pensions after retirement. We propose to analyze portfolio composition dynamics before and after retirement using 1992-2002 HRS data (especially the SSA-funded user-friendly RAND HRS data). Our model jointly explains ownership and amounts held of several key asset types. Portfolio adjustment is explained by changes in family composition, income, pension and Social Security entitlements, retirement expectations, etc. We will simulate the consequences for retirement resources of such proposed reforms as Social Security personal accounts, mandatory annuitization, and bequeathability of their balances.

Working Paper:
Savings, Portfolio Choice, and Retirement Expectations