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Household Portfolios and Retirement Saving over the Life Cycle

Author

Listed:
  • Jonathan A. Parker
  • Antoinette Schoar
  • Allison T. Cole
  • Duncan Simester

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.

Suggested Citation

  • Jonathan A. Parker & Antoinette Schoar & Allison T. Cole & Duncan Simester, 2022. "Household Portfolios and Retirement Saving over the Life Cycle," NBER Working Papers 29881, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29881
    Note: AG AP CF EFG ME
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    File URL: http://www.nber.org/papers/w29881.pdf
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    Cited by:

    1. Michael Weber & Bernardo Candia & Olivier Coibion & Yuriy Gorodnichenko, 2023. "Do You Even Crypto, Bro? Cryptocurrencies in Household Finance," NBER Working Papers 31284, National Bureau of Economic Research, Inc.
    2. Marta Cota, 2023. "Extrapolative Income Expectations and Retirement Savings," CERGE-EI Working Papers wp751, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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