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Article
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
  • Steve Fraser, University of South Florida
  • William Jennings, USAFA
  • David King, Marquette University
Document Type
Article
Language
eng
Format of Original
32 p.
Publication Date
1-1-2001
Publisher
Academy of Financial Services
Original Item ID
doi: 10.1016/S1057-0810(01)00072-5
Abstract

This 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.

Comments

Published version. Financial Services Review, Vol. 9, No. 4 (2001): 295-326. DOI.

Article written when authors were employed by the US Government.

Citation Information
Steve 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/