The economics of investing : risk-aversion and retirement decisions
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This thesis is a study of the impact that risk-aversion has on individual retirement investment decisions. The first portion of the work details the decline in Social Security and pensions plan payments over recent years. This finding adds to the urgency for the employee to focus on personal savings to meet retirement goals. Aggregate personal savings have been dropping since 1980, and individuals are making the situation worse by saving in low return bank accounts. Discovering the sources of risk and risk-aversion allow the investor to establish plans to reduce risk in their investments. By controlling for risk factors, the investor can invest more aggressively to ensure herself a comfortable retirement life.