Chapter

Retirement Saving Adequacy and Individual Investment Risk Management Using the Asset/Salary Ratio

P. Brett Hammond and David P. Richardson

in Reorienting Retirement Risk Management

Published in print August 2010 | ISBN: 9780199592609
Published online September 2010 | e-ISBN: 9780191594618 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199592609.003.0002
Retirement Saving Adequacy and Individual Investment Risk Management Using the Asset/Salary Ratio

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This chapter uses a concept dubbed the asset/salary ratio (ASR) to examine factors that boost the chances that defined contribution plan participants will have sufficient assets to generate adequate retirement income. The authors show that, for a sample of higher‐education participants, assets are (on average) consistent with at least a 70 percent income replacement rate. Key factors predictive of success are an adequate contribution rate and long tenure in the system; having a portfolio weighted to equities is also beneficial but to a lesser extent.

Keywords: retirement security; asset accumulation; saving rate; replacement rate

Chapter.  7786 words.  Illustrated.

Subjects: Pensions

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