Utility Evaluation of Risk in Retirement Saving Accounts
Utility Evaluation of Risk in Retirement Saving Accounts
This chapter evaluates the effect of holding a broadly diversified portfolio of common stocks compared to a portfolio of index bonds on the distribution of 401(k) account balances at retirement using stochastic algorithm. It describes the distribution of wealth outcomes for different investment allocation rules and calculates an expected utility measure corresponding to each distribution. This chapter concludes that both approaches to the evaluation of risk can be important and that the appropriateness of each is likely to depend on the specific goal of the evaluation.
Keywords: retirement savings, diversified portfolio, common stocks, index bonds, stochastic algorithm, expected utility measure
Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
Please, subscribe or login to access full text content.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.