Allocating Assets in Retirement Savings to Avoid Downside Risk Available to Purchase

An investor saving for retirement attempts to allocate as sets in a manner that provides enough savings to produce a secure post retirement income. Falling short of the desired saving level has a large negative impact on retirement income and is a major concern for the investor. We empirically investigate the allocation of assets between equities and less risky bonds constrained by a desire to minimize the size and occurrence of a short fall. Contrary to much of the theoretical finance literature, we find that the investor should decrease the portion of saving in equities as the retirement date approaches.