Strategic Asset Allocation for Individual Investors: The Impact of the Present Value of Social Security BenefitsFinancial Services Review: the Journal of Individual Financial Management
Format of Original32 p.
PublisherAcademy of Financial Services
Original Item IDdoi: 10.1016/S1057-0810(01)00072-5
AbstractThis paper demonstrates the dramatic effect of social security wealth on individuals’ asset allocation. We first discuss why social security wealth should be included in portfolio asset-mix decisions. We then draw parallels between social security benefits and inflation-indexed treasury bonds to help quantify the present value of social security benefits. Finally, we show the portfolio impact of including social security wealth under several asset-mix decision rules. Excluding social security wealth from the asset mix decision results in sub-optimal portfolios. Including social security wealth provides an incentive for including more stock in the asset mix.
Citation InformationSteve Fraser, William Jennings and David King. "Strategic Asset Allocation for Individual Investors: The Impact of the Present Value of Social Security Benefits" Financial Services Review: the Journal of Individual Financial Management (2001) ISSN: 1057-0810
Available at: http://works.bepress.com/david_king/5/