THE OPTIMAL PORTFOLIO FOR RETIREES: BALANCING RISK AND LONGEVITY

Authors

  • Dr. Fahad Ahsan Professor, Department of Finance, Lahore School of Economics, Pakistan. Author

Keywords:

Retirement planning, portfolio optimization, longevity risk, market risk, annuities, longevity insurance, dynamic asset allocation

Abstract

Retirement planning presents a unique set of challenges, where individuals must navigate the delicate balance between maximizing investment returns while mitigating the ever-present risk of outliving their savings. This article delves into the complexities of constructing an optimal portfolio for retirees, specifically focusing on the interplay between market risk and longevity risk. We critically evaluate traditional portfolio optimization frameworks through the lens of retirement realities and explore alternative strategies that incorporate longevity-specific considerations. We then discuss the role of financial products like annuities and longevity insurance in mitigating longevity risk and enhancing portfolio resilience. Finally, we present a framework for constructing a dynamic retirement portfolio that adapts to changing market conditions and longevity uncertainties.

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Published

2018-12-31

Issue

Vol. 2 No. 01 (2018): Journal of Applied Finance and Economic Policy

Section

Research Articles

License

Copyright (c) 2018 Dr. Fahad Ahsan (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

All articles in the Journal of Applied Finance and Economic Policy are published under the Creative Commons Attribution 4.0 (CC BY 4.0) license. Users may share, distribute, and adapt the content for any purpose, including commercial use, provided proper credit is given to the authors and the journal.