TY  - JOUR
AU  - Maurer,Raimond
AU  - Mitchell,Olivia S.
AU  - Rogalla,Ralph
TI  - The Effect of Uncertain Labor Income and Social Security on Life-cycle Portfolios
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15682
PY  - 2010
Y2  - January 2010
UR  - http://www.nber.org/papers/w15682
L1  - http://www.nber.org/papers/w15682.pdf
N1  - Author contact info:
Raimond Maurer
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rmaurer@wiwi.uni-frankfurt.de

Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu

Ralph Rogalla
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rogalla@finance.uni-frankfurt.de
AB  - 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.
ER  -