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  1. Home
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  3. Advances in Retirement Investing
  • Cited by 5
Publisher:
Cambridge University Press
Online publication date:
August 2020
Print publication year:
2020
Online ISBN:
9781108917377
DOI:
https://doi.org/10.1017/9781108917377
Subjects:
Economics, Finance and Accountancy
Series:
Elements in Quantitative Finance
Information

Book description

To supplement replacement income provided by Social Security and employer­sponsored pension plans, individuals need to rely on their own saving and investment choices during accumulation. Once retired, they must also decide at which rate to spend their savings, with the usual dilemma between present and future consumption in mind. This Element explains how financial engineering and risk management techniques can help them in these complex decisions. First, it introduces 'retirement bonds', or retirement bond replicating portfolios, that provide stable and predictable replacement income during the decumulation period. Second, it describes investment strategies that combine the retirement bond with an efficient performance­seeking portfolio so as to reduce uncertainty over the future amount of income while offering upside potential. Finally, strategies using risk insurance techniques are proposed to secure minimum levels of replacement income while giving the possibility of reaching higher levels of income.

References

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