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We examine the implications for Australian retirees of full access to dividend imputation credits using a stochastic life‐cycle model. We find that the availability of imputation credits can justify a significant bias towards Australian equities in retirement portfolios, largely at the expense of world equities. We also generate estimates of the value of imputation credits to retirees, finding it could potentially support increased consumption during retirement of 5–6 per cent, or equivalent value to a 8–9 per cent higher balance at retirement. Our study enhances the understanding of equity home bias, and provides insights relevant for public policy. [ABSTRACT FROM AUTHOR] email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
