Reducing Social Security PRA Risk at the Individual Level: Life-Cycle Funds and No-Loss Strategies

Retirement savers in a Social Security system with a personal retirement
account (PRA) component would face the challenge of deciding how to allocate their PRA portfolios across a broad range of asset classes and across
many different financial products. Asset allocation decisions have important consequences for retirement wealth accumulation because they affect
the expenses of investing as well as the risk of low returns. The goal of this
chapter is to assess the relative risk associated with alternative asset allocation strategies in PRAs. It also offers insight on the consequences of
different asset allocation rules in current private-sector defined contribution (DC) plans, such as 401(k) plans.
Quantifying the risk associated with