RT Journal Article
SR Electronic
T1 Optimizing Retirement Income:
An Adaptive Approach Based on Assets and Liabilities
JF The Journal of Retirement
FD Institutional Investor Journals
SP 124
OP 135
DO 10.3905/jor.2013.1.1.124
VO 1
IS 1
A1 Yuan-An Fan
A1 Steve Murray
A1 Sam Pittman
YR 2013
UL https://pm-research.com/content/1/1/124.abstract
AB Many retirees’ financial resources are insufficient to sustain their desired expenditures, which makes clear the need for more efficient retirement asset allocation strategies. We propose an approach to retirement investing that directly incorporates spending targets within a multiperiod framework that improves performance with respect to spending sustainability and bequest motives. We propose an “adaptive” model, which is dynamic and allows for recourse decisions and permits changes in asset allocation in response to market outcomes as the retiree ages. Practitioners can use the adaptive model to increase the sustainability of their clients’ spending and the funding of bequests, thereby enhancing their clients’ welfare in their later years.TOPICS: Portfolio construction, performance measurement, retirement