Does the Source of Money Determine Retirement Investment Choices?
17 Pages Posted: 25 Aug 2017
Date Written: August 23, 2017
Using a unique dataset of actual investment choices, we investigate how the investment choices differ between (1) the optional retirement plan (ORP) funded by the employer and (2) the investments in 403(b) accounts funded by employees themselves using voluntary salary reduction. We find that the level of risk associated with voluntary, salary reduction investments in 403(b) accounts is lower than the risk employees are currently taking in their employer funded 401(a) accounts. We also investigate whether the choice of the provider has a significant impact on the asset allocation chosen by the employees.
Keywords: 403(B), Investment Choices, Highly-Educated Individuals, Investment Risk
JEL Classification: D14, G41
Suggested Citation: Suggested Citation