Savings, Portfolio Choice, and Retirement Expectations

24 Pages Posted: 19 Feb 2008

See all articles by Arthur van Soest

Arthur van Soest

Tilburg University; Netspar; RAND Corporation; Institute for the Study of Labor (IZA)

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Date Written: May 2006

Abstract

Studying household investment behavior is essential for understanding the full consequences of old age social security benefits. Using data from six waves of the Health and Retirement Study, we analyze the dynamics of portfolio composition before respondents start claiming social security benefits. We consider ownership as well as amounts held of several types of assets and debts. Using panel data censored regression models, portfolio adjustment is explained on the basis of demographics like gender, race, and year of birth, education level, household income, and perceived social security entitlements. We find that expectations of old age social security benefits have little effect on portfolio decisions, although there is some evidence that higher expected social security benefits lead to more risky financial investments, particularly in IRAs.

Suggested Citation

van Soest, Arthur H. O. and van Soest, Arthur H. O. and Kapteyn, Arie, Savings, Portfolio Choice, and Retirement Expectations (May 2006). Michigan Retirement Research Center Research Paper No. WP 2006-119, Available at SSRN: https://ssrn.com/abstract=1094984 or http://dx.doi.org/10.2139/ssrn.1094984

Arthur H. O. van Soest (Contact Author)

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

RAND Corporation ( email )

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Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States
310-448-5383 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
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Germany

National Bureau of Economic Research (NBER) ( email )

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United States