Pre- and post-retirement asset allocation: a simulation of retirement investment strategies for agricultural producers

Simple item page
dc.contributor.authorWhite, Alexander B.en
dc.contributor.committeechairMcGuirk, Anyaen
dc.contributor.committeecochairKohl, David M.en
dc.contributor.committeememberBosch, Darrell J.en
dc.contributor.committeememberMcGilliard, Michaelen
dc.contributor.committeememberSherrick, Bruce J.en
dc.contributor.departmentAgricultural and Applied Economicsen
dc.date.accessioned2014-03-14T21:12:39Zen
dc.date.adate2008-06-06en
dc.date.available2014-03-14T21:12:39Zen
dc.date.issued1995en
dc.date.rdate2008-06-06en
dc.date.sdate2008-06-06en
dc.description.abstractThis research simulates pre-retirement investment scenarios for agricultural producers. Thirty-two investment scenarios are examined, with each scenario differing with respect to retirement vehicle, investment strategy of the producer, and the use of a cash margin for reinvestment in the operation versus prepaying term debt (cash preference). The retirement vehicles included in this study are Individual Retirement Accounts (IRAs), Simplified Employee Pension Plans (SEPs), and 401(k) plans. Investment strategies reflect the producer's preference for investing in conservative, balanced, or aggressive assets, or a combination of these assets. Further, these scenarios are examined for three methods of capitalization: Case I- an operation with a 50 percent debt/asset ratio; Case II - an operation with a 65 percent debt/asset ratio; Case III - an operation with a 65 percent debt/asset ratio with a majority of the farm land being leased. The analytical model simulates the annual cash flows of a commercial agricultural operation for each investment scenario over a 30-year period. Stochastic rates of return, generated using a vector-autoregressive (VAR) model, are incorporated into the simulation model. Each scenario is replicated 100 times using different vectors of stochastic rates of return. Results show investment in retirement vehicles does not significant reduce ending farm assets, regardless of investment strategy or cash preference of the producer. Use of retirement vehicles does have a significant positive impact on ending net worth for the producer. IRAs are not significant investment tools for producers (or spouses) who are participants in another qualified retirement plan. Investment strategy has a major impact on ending net worth. Aggressive and dynamic (aggressive to conservative as retirement approaches) investment strategies dominate conservative and balanced strategies. Use of cash margin to prepay debt has no advantage over reinvesting in the farm. Retirement vehicles greatly improve the probability of meeting estimated family living needs during retirement, and generate greater diversity and liquidity of the retirement portfolio. Further, retirement vehicles are more important for producer with highly-leveraged operations and for producers who lease a majority of their assets.en
dc.description.degreePh. D.en
dc.format.extentxii, 162 leavesen
dc.format.mediumBTDen
dc.format.mimetypeapplication/pdfen
dc.identifier.otheretd-06062008-155229en
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-06062008-155229/en
dc.identifier.urihttp://hdl.handle.net/10919/38097en
dc.language.isoenen
dc.publisherVirginia Techen
dc.relation.haspartLD5655.V856_1995.W458.pdfen
dc.relation.isformatofOCLC# 33191278en
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.subjectvector-autoregressionen
dc.subject.lccLD5655.V856 1995.W458en
dc.titlePre- and post-retirement asset allocation: a simulation of retirement investment strategies for agricultural producersen
dc.typeDissertationen
dc.type.dcmitypeTexten
thesis.degree.disciplineAgricultural and Applied Economicsen
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen
thesis.degree.leveldoctoralen
thesis.degree.namePh. D.en

Files

Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
LD5655.V856_1995.W458.pdf
Size:
9.14 MB
Format:
Adobe Portable Document Format
Description:
Download

Collections

Doctoral Dissertations