Using participant data to improve 401(k) asset allocation

Li, Zhenyu, and Anthony Webb. “Using participant data to improve 401(k) asset allocation”. Issue in Brief 12-17, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, September 2012. http://hdl.handle.net/2345/bc-ir:103936.
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Abstract

The brief's key findings are: (1) Since many households fail to shift their 401(k) assets towards less risky investments as they age, target date funds do it automatically. (2) Conventional target date funds rely only on the participant's age to determine the asset allocation strategy. (3) In contrast, semi-personalized target date funds add information on the participant's earnings, 401(k) balance, and savings rate. (4) Both investment strategies are better than leaving individuals on their own, but the semi-personalized approach generally outperforms the conventional approach. (5) These results can be further improved by including information on the household rather than simply the individual and by accounting for earnings uncertainty.

Title
Using participant data to improve 401(k) asset allocation
Author
Li, Zhenyu
Webb, Anthony
Center
Center for Retirement Research
Genre
report
Date Issued
September 2012
Publisher
Center for Retirement Research at Boston College
Series Title
Issue in Brief
Series Number
12-17
Version Identification
Version of record.
Persistent Link
http://hdl.handle.net/2345/bc-ir:103936
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Financing retirement

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