Optimal savings for retirement: The role of individual accounts and disaster expectations

Arbeitspapier

We employ a life-cycle model with income risk to analyze how tax-deferred individual accounts affect households' savings for retirement. We consider voluntary accounts as opposed to mandatory accounts with minimum contribution rates. We contrast add-on accounts with carve-out accounts that partly replace social security contributions. Quantitative results suggest that making add-on accounts mandatory has adverse welfare effects across income groups. Carve-out accounts generate welfare gains for high and middle income earners but welfare losses for low income earners. In the presence of rare stock market disasters, individual accounts with default portfolio allocation crowd out direct stockholding and substantially reduce welfare.

Object Details

• ISBN: 978-3-86558-775-6
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper Series 1 ; No. 2011,33

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Consumption; Saving; Wealth ; Social Security and Public Pensions ; Portfolio Choice; Investment Decisions
• Subject: individual retirement accounts ; household portfolio choice ; consumption and saving over the life-cycle ; Alterssicherung ; Sparen ; Lebenszyklus ; Steuerbegünstigung ; Anlageverhalten ; Portfolio-Management ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Le Blanc, Julia ; Scholl, Almuth
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/54985
• Last update: 10.03.2025, 11:44 AM CET