The Association Between Financial Risk and Retirement Satisfaction

Abstract

A higher level of risky financial assets that a retiree holds may produce higher returns, resulting in utility gains. To test this hypothesis, a variable is constructed measuring retirees’ ratio of risky assets to total assets (risk ratio). Next, the association between the risk ratio and retiree utility is examined using a retirement satisfaction variable from the 1992-2014 waves of the Health and Retirement Study. The findings suggest that increases in retirees’ risk ratio is associated positively with increases in their retirement satisfaction. The results and ensuing discussion offer a new per- spective for retiree asset management.