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Abstract
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
- © 2013 Pageant Media Ltd
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US and Overseas: +1 646-931-9045
UK: 0207 139 1600