NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effect of Uncertain Labor Income and Social Security on Life-cycle Portfolios

Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla

NBER Working Paper No. 15682
Issued in January 2010
NBER Program(s):   AG   LS   PE

This paper examines how labor income volatility and social security benefits can influence lifecycle household portfolios. We examine how much the individual optimally saves and where, taking into account liquid financial wealth and annuities, and stocks as well as bonds. Higher labor income uncertainty and lower old-age benefits boost demand for stable income in retirement, but also when young. In addition, a declining equity glide path with age is appropriate for the worker with low income uncertainty; for the high income risk worker, equity exposure rises until retirement. We also evaluate how differences in social security benefits can influence retirement risk management.

download in pdf format
   (241 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (241 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15682

Users who downloaded this paper also downloaded these:
Lusardi, Mitchell, and Curto w15469 Financial Literacy and Financial Sophistication Among Older Americans
Chai, Maurer, Mitchell, and Rogalla w17134 Lifecycle Impacts of the Financial and Economic Crisis on Household Optimal Consumption, Portfolio Choice, and Labor Supply
Gomes, Kotlikoff, and Viceira w13966 Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds
Mitchell, Mottola, Utkus, and Yamaguchi w15108 Default, Framing and Spillover Effects: The Case of Lifecycle Funds in 401(k) Plans
Mulligan w15681 Aggregate Implications of Labor Market Distortions: The Recession of 2008-9 and Beyond
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us