Assessing the Performance of Life-Cycle Portfolio Allocation Strategies for Retirement Saving: A Simulation Study

by Benjamin Bridges, Robert Gesumaria, and Michael V. Leonesio
Social Security Bulletin, Vol. 70 No. 1, 2010

Text description for Chart 1.
Distributions of real internal rates of return (IRRs) for stochastically simulated retirement savings accounts using 1926–2008 investment returns for 1915–1942 birth cohorts

This chart is a box and whisker plot that provides a graphic representation of real internal rates of return distributions presented in Table 4. Endnote 23 describes the types of statistics displayed in this box and whisker plot.

In this chart, the horizontal (X) axis shows internal rates of return in percentages ranging from less than -20 percent to more than 30 percent. The vertical (Y) axis shows names of each of eight retirement savings account plans.

The box and whisker diagrams display the following internal rate of return statistics for each plan: minimum, 25th percentile, median, 75th percentile, and maximum values; the lower adjacent value, equal to the 25th percentile value minus one and one-half times the interquartile range; and the upper adjacent value, equal to the 75th percentile value plus one and one-half times the interquartile range. The interquartile range is equal to the difference between the 75th percentile and the 25th percentile values.

All values are given in Table 4 except for upper and lower adjacent values, which can be calculated from Table 4.

Table equivalent for Chart 2. Hypothetical portfolios: Percentage of contributions invested in stocks at ages 22–61
Age Conservative Baseline Aggressive L plan No-lose
22 70 85 90 90 52.2594
23 70 85 90 89 52.2627
24 70 85 90 88 52.2867
25 70 85 90 87 52.2984
26 70 85 90 86 52.2992
27 70 85 90 85 52.2767
28 70 85 90 84 52.2666
29 70 85 90 83 52.2465
30 68.1 82.7 88.4 82 52.2345
31 66.1 80.5 86.8 81 52.2139
32 64.2 78.2 85.2 80 52.2087
33 62.3 76 83.5 79 52.1665
34 60.3 73.7 81.9 78 52.1354
35 58.4 71.5 80.3 77 52.0718
36 56.5 69.2 78.7 76 51.9923
37 54.5 66.9 77.1 75 51.9249
38 52.6 64.7 75.5 74 51.8064
39 50.6 62.4 73.9 73 51.6846
40 48.7 60.2 72.3 72 51.5633
41 46.8 57.9 70.6 71 51.4406
42 44.8 55.6 69 70 51.3297
43 42.9 53.4 67.4 69 51.2329
44 41 51.1 65.8 68 51.1073
45 39 48.9 64.2 67 50.9804
46 37.1 46.6 62.6 66 50.8924
47 35.2 44.4 61 65 50.7796
48 33.2 42.1 59.4 63.5 50.6861
49 31.3 39.8 57.7 62 50.6197
50 29.4 37.6 56.1 60.5 50.6005
51 27.4 35.3 54.5 59 50.5743
52 25.5 33.1 52.9 57.5 50.5758
53 23.6 30.8 51.3 56 50.6111
54 21.6 28.5 49.7 54.5 50.6796
55 19.7 26.3 48.1 53 50.7814
56 17.8 24 46.4 51.5 50.8935
57 15.8 21.8 44.8 50 51.0243
58 13.9 19.5 43.2 44 51.1967
59 11.9 17.3 41.6 38 51.3902
60 10 15 40 32 51.6299
61 10 15 40 26 51.9091