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Asset allocation and age effects in retirement savings choices


  • The authors gratefully acknowledge the support of HESTA, GESB, UniSuper, and STA in the conduct of this research. We would also like to thank Jacqui Whale for her excellent work on four complex databases and extracting the data for the analysis. We also thank the very helpful comments of two anonymous referees, Rose Kushmeider and other participants of the 2007 Washington Area Finance Conference, and Don Ross and other participants at the 2007 Annual Meeting of the Academy of Financial Services.


We examine the asset allocation decisions of members of three large Australian retirement savings funds. Superannuation Guarantee legislation in 1992 made Australian employees compulsory investors by requiring employers to contribute a fixed proportion of earnings to a superannuation fund on behalf of employees. A majority of these employees can choose an investment strategy for these contributions. We examine how actual investment strategy and asset allocation choices of members change with age in view of the conventional wisdom that individuals allocate less to risky assets as they age and investments theory which provides conflicting advice on the issue.