Will Equities Always Deliver for Pensioners?

Looking back at history suggests those planning for retirement should have allocated 100% to equities, but any increase in volatility upsets the models

John Rekenthaler 20 December, 2018 | 2:26PM

Retirement Nest Egg

Investing for retirement is straightforward: place as much in equities as is comfortable, contribute regularly, keep costs low, and let time do the work. Investing during retirement is far more complex. Additional considerations include working out how much to withdraw from your pot, determining the time horizon, and deciding how flexibly to manage both the portfolio and withdrawal rate in response to stock market meltdowns.

A working paper entitled "Toward Determining the Optimal Investment Strategy for Retirement," by IESE Business School's Javier Estrada and Mark Kritzman of Windham Capital Management, sheds light on how retirement asset allocation is affected by stock market projections.

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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