TY - JOUR T1 - Growing Old Gracefully JF - The Journal of Wealth Management SP - 20 LP - 24 DO - 10.3905/jwm.2000.320369 VL - 2 IS - 4 AU - Tracey McNaughton AU - John Piggott AU - Sachi Purcal Y1 - 2000/01/31 UR - https://pm-research.com/content/2/4/20.abstract N2 - The authors set out to deal with the question of the relationship between portfolio risk exposure and age, contracting risk constancy with systematic gradual risk reduction. They take issue with a conclusion offered by Paul Samuelson in the Fall 1994 issue of the Journal of Portfolio Management, arguing that his intuitive account of the “escrow” argument for age-phasing is misleading because it ignores the impact of the differential between risky and safe rates of return on the size of the overall accumulation. They explain with a numerical simulation that, far from age-phasing holding in general, the opposite is more likely to be true - escrow is likely to lead an investment strategy in which the proportion in risky assets increases over the life cycle. The age-phasing result will be generated on only a small number of cases where, over a life cycle, safe rates returns. They also demonstrate that for most of us, who accumulate our assets through the working phases of life, financial age-phasing may be a consequence of a savings rule. Financial planners who urge age-phasing may be advocating constant equity exposure after adjusting for the financial portfolio effects of a saving through time. ER -