Document Type




Format of Original

32 p.

Publication Date

Winter 2001


Academy of Financial Services

Source Publication

Financial Services Review: the Journal of Individual Financial Management

Source ISSN


Original Item ID

doi: 10.1016/S1057-0810(01)00072-5


This paper demonstrates the dramatic effect of social security wealth on individuals’ asset allocation. We first discuss why social security wealth should be included in portfolio asset-mix decisions. We then draw parallels between social security benefits and inflation-indexed treasury bonds to help quantify the present value of social security benefits. Finally, we show the portfolio impact of including social security wealth under several asset-mix decision rules. Excluding social security wealth from the asset mix decision results in sub-optimal portfolios. Including social security wealth provides an incentive for including more stock in the asset mix.


Published version. Financial Services Review, Vol. 9, No. 4 (2001): 295-326. DOI. © 2001 Academy of Financial Services. Used with permission.

Article written when authors were employed by the US Government.