Lifetime income streams such as Social Security, pensions, and private annuities provide a base of safe spending that affects the consequences of taking risk in an investment portfolio. This presentation demonstrates the implications of lifetime income on retirement outcomes such as failure rates and utility maximization, and explains how optimal portfolio allocation is affected by various types of income streams. Attendees will better understand how optimal equity allocations are affected by lifetime income and how to help clients recognize the difference between income risk and portfolio volatility.
Understand the implications of lifetime income on portfolio risk in retirement.
Evaluate how optimal portfolios are affected by the amount of lifetime income within an overall household balance sheet.
Professor, Frank M. Engle Chair of Economic Security Research,
The American College of Financial Services