Target Date Funds and Portfolio Choice in 401(k) Plans

Olivia Mitchell and Stephen Utkus

No 26684, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Target date funds in corporate retirement plans grew from $5B in 2000 to $734B in 2018, partly because federal regulation sanctioned these as default investments in automatic enrollment plans. We show that adopters delegated pension investment decisions to fund managers selected by plan sponsors. Including these funds in retirement saving menus raised equity shares, boosted bond exposures, curtailed cash/company stock holdings, and reduced idiosyncratic risk. The adoption of low-cost target date funds may enhance retirement wealth by as much as 50 percent over a 30-year horizon.

JEL-codes: D12 D14 D91 G5 G51 J32 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-age
Note: AG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Olivia S. Mitchell & Stephen P. Utkus, 2022. "Target-date funds and portfolio choice in 401(k) plans," Journal of Pension Economics and Finance, vol 21(4), pages 519-536.

Downloads: (external link)
http://www.nber.org/papers/w26684.pdf (application/pdf)

Related works:
Journal Article: Target-date funds and portfolio choice in 401(k) plans (2022)
Working Paper: Target date funds and portfolio choice in 401(k) plans (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:26684

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26684

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().