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Track T8-2: Return Expectations of Households and Professionals
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Presentations | ||
Return Heterogeneity in Retirement Accounts 1Rutgers Business School; 2University of Lausanne; 3Stockholm School of Economics We study the performance of IRA pension plans from 2004 through 2018. We document novel evidence of large return heterogeneity across income groups in the US, and provide estimates of its impact on wealth inequality. High-income individuals substantially outperform low-income ones, and this return differential is almost three times as large in “tax-free” Roth IRAs. These returns cannot be matched by equity market returns, but are consistent with high-income individuals having exposure to private assets.
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