Abstract
In <b><i>Securing Replacement Income with Goal-Based Retirement Investing Strategies</i></b>, from the Spring 2020 issue of <b><i>The Journal of Retirement</i></b>, authors <b>Lionel Martellini, Vincent Milhau</b> (both of <b>EDHEC-Risk Institute</b> in <b>Nice, France</b>) and <b>John Mulvey</b> (of <b>Princeton University</b>) address how to provide investors with their minimum required retirement income while offering the flexibility to invest for growth (and potentially higher retirement income). Annuities and target-date funds offer either guaranteed income or flexibility, but not both at the same time. Martellini, Milhau, and Mulvey recommend a goal-based investing (GBI) strategy that consists of building blocks designed to realize different goals. The first building block is a retirement goal-hedging portfolio (GHP) consisting of bonds whose principal and interest payments can generate sufficient income for the first 20 years of retirement. After that, a deferred annuity can cover retirees’ income needs for the rest of their lives. The second building block is a performance-seeking portfolio (PSP) of long-term growth investments that offer the chance for upside and higher income after retirement. Financial advisors can be of great help to clients who adopt this strategy—constructing and managing GHPs and PSPs and recommending specific deferred annuities. <b>TOPICS:</b>Retirement, pension funds, wealth management
Published Version
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