Impact of persistent bad returns and volatility on retirement outcomes
Author(s)
Basu, Anup K
Wiafe, Osei K
Griffith University Author(s)
Year published
2017
Metadata
Show full item recordAbstract
We examine wealth outcomes and risk of ruin faced by retirees due to persistent bad returns and high volatility in equity markets occurring at different stages of their retirement. Our results show poor equity returns persisting over long periods can put retirement security to serious risk but volatile market conditions actually have the opposite impact. The timing of such persistent bad returns and volatility (early or late stages of retirement) is critical and has differing effects on retirement outcomes. The results are robust to varying portfolio allocations to equities although the precise impacts are different.We examine wealth outcomes and risk of ruin faced by retirees due to persistent bad returns and high volatility in equity markets occurring at different stages of their retirement. Our results show poor equity returns persisting over long periods can put retirement security to serious risk but volatile market conditions actually have the opposite impact. The timing of such persistent bad returns and volatility (early or late stages of retirement) is critical and has differing effects on retirement outcomes. The results are robust to varying portfolio allocations to equities although the precise impacts are different.
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Journal Title
Finance Research Letters
Note
This publication has been entered into Griffith Research Online as an Advanced Online Version.
Subject
Banking, finance and investment
Banking, finance and investment not elsewhere classified