Abstract
This study uses time series data to consider the effect of retirement wealth upon individuals' portfolio composition. When home equity is regarded as retirement wealth or a consumption good, retirement wealth is negatively correlated with the percentage of intermediate-term bonds, long-term bonds, and equities in individual portfolios. The relationship remains significant for long-term bonds and equities when individuals' holdings are regressed on retirement wealth and other macroeconomic variables. A similar but less significant relationship exists when home equity is regarded as a financial asset. Elasticity estimates for these assets suggest changes in retirement wealth can have significant impact on individual portfolio holdings.
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