Business, Management and Accounting
8 years ago

Social Security benefits dramatically impact individual asset allocation decisions

Financial Services Review
Strategic asset allocation for individual investors: the impact of the present value of Social Security benefits
Steve P. Fraser, William W. Jennings, David R. King

Paper Summary

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Social Security benefits significantly impact individuals' investment decisions. Including Social Security wealth in asset allocation leads to better portfolios. Social Security benefits can be compared to inflation-indexed treasury bonds to determine their present value. Not considering Social Security wealth in asset mix decisions results in less optimal portfolios. Including Social Security wealth encourages investing more in stocks.