Subject: More on Risk: A Response to Mr Reischauer
Mr Reischauer says:
"Under these assumptions, the replacement rate for those turning 62 in 1969-70 would have been close to 100 percent; for those turning 62 in the mid 1970s only 40 percent".
Once again, he uses assumptions that are NOT realistic: he assumes that the employee has invested 100% of his savings in 100% stocks investments. Obviously, the most unsiphisticated person knows that as a worker approaches retirement, the mix of stocks vs bonds should be adjusted to minimize volatility.
At the very end of his comment, he states that his example is "extreme". Then, if it is extreme, it is NOT representative; if fact it is irrelevant and misleading and not helpful in the discourse.
