Determining the "glide path" for target-date funds

Authors

  • Brian Boscaljon Penn State University-Erie

DOI:

https://doi.org/10.61190/fsr.v20i2.4696

Keywords:

Life-cycle hypothesis, Retirement, Time horizon, Asset allocation, Target date funds

Abstract

On June 16, 2010, the SEC proposed new guidelines for target date funds to follow regarding the explanation of glide paths. This paper presents a model that determines a "glide path" for individuals and target date funds. At some point in time individuals with diminishing human capital are no longer primarily concerned with maximizing wealth. Rather, their primary goal is to obtain a target retirement wealth level to sustain a constant level of consumption during retirement. A critical wealth level is defined that combined with a retirement goal provide a rational approach for reducing risky assets as an individual approaches retirement.

Downloads

Published

2011-06-30

How to Cite

Boscaljon, B. (2011). Determining the "glide path" for target-date funds. Financial Services Review, 20(2), 113–128. https://doi.org/10.61190/fsr.v20i2.4696

Issue

Vol. 20 No. 2 (2011): FSR Summer 2011

Section

New Original Submission

License

Copyright (c) 2011 Academy of Financial Services

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Author(s) retain copyright and grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows to share the work with an acknowledgment of the work's authorship and initial publication in this Journal.

This license allows the author to remix, tweak, and build upon the original work non-commercially. The new work(s) must be non-commercial and acknowledge the original work.