Target date funds and portfolio choice in 401(k) plans

Olivia S. Mitchell and Stephen P. Utkus

Target date funds in corporate retirement plans grew from $5B in 2000 to $734B in 2018, partly because federal regulation sanctioned these as default investments in automatic enrollment plans. We show that adopters delegated pension investment decisions to fund managers selected by plan sponsors. Including these funds in retirement saving menus raised equity shares, boosted bond exposures, curtailed cash/company stock holdings, and reduced idiosyncratic risk. The adoption of low-cost target date funds may enhance retirement wealth by as much as 50 percent over a 30-year horizon.

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Year of publication:	[2021]
Authors:	Mitchell, Olivia S. ; Utkus, Stephen P.
Publisher:	Frankfurt am Main, Germany : Center for Financial Studies, Goethe University
Subject:	automatic enrollment \| pension \| portfolio allocation \| endorsement effect \| default effect \| retirement saving \| Portfolio-Management \| Portfolio selection \| Pensionskasse \| Pension fund \| Sparen \| Savings \| Altersvorsorge \| Retirement provision \| Betriebliche Altersversorgung \| Occupational pension plan

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Extent:	1 Online-Ressource (circa 44 Seiten) Illustrationen
Series:	CFS working paper series. - Frankfurt, M. : [Verlag nicht ermittelbar], ZDB-ID 2196856-1. - Vol. no. 662
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	10.2139/ssrn.3965695 [DOI] hdl:10419/246874 [Handle]
Classification:	D12 - Consumer Economics: Empirical Analysis ; D14 - Personal Finance ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; g41 ; g51 ; J32 - Nonwage Labor Costs and Benefits; Private Pensions
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012665505