Household Portfolios and Retirement Saving over the Life Cycle

Jonathan Parker, Antoinette Schoar, Allison Cole and Duncan Simester

No 29881, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: US middle-class households invested 10% more of their investable wealth in the stock market in the past two decades than they did in the 1990s, and this share is now hump-shaped in age, declining after age 50. We present a range of evidence that the Pension Protection Act (PPA) — which allowed Target Date Funds (TDFs) as default options in retirement plans — played an important role. Younger (older) workers starting at the same firm after TDFs became the default option post-PPA, invested more (less) in stocks. in line with the TDF glide path. In contrast to portfolio allocations, contribution rates changed little following the PPA.

JEL-codes: D14 E21 G11 G23 G28 G51 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-age, nep-fmk and nep-mac
Note: AG AP CF EFG ME
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