Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds

  title={Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds},
  author={Francisco Gomes and L. Kotlikoff and Luis M. Viceira},
  journal={Pension Risk Management eJournal},
  • Francisco Gomes, L. Kotlikoff, Luis M. Viceira
  • Published 2008
  • Economics
  • Pension Risk Management eJournal
  • We investigate optimal consumption, asset accumulation and portfolio decisions in a realistically calibrated life-cycle model with flexible labor supply. Our framework allows for wage rate uncertainly, variable labor supply, social security benefits and portfolio choice over safe bonds and risky equities. Our analysis reinforces prior findings that equities are the preferred asset for young households, with the optimal share of equities generally declining prior to retirement. However, variable… CONTINUE READING
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