<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Investment risk and retirement income security are constant bedfellows. This paper provides estimates of investment risk for defined contribution (DC) plan members to illustrate the importance of compounding (both positive and negative) during the accumulation phase of retirement saving <italic>and</italic> associated retirement income during the decumulation phase. In addition to workers being exposed to investment risk via their DC plan, older workers face significant COVID-19 related headwinds in the labour market. The cresting of investment risk with the current pandemic may create a lost generation of those approaching retirement (and recently retired) through lower contribution rates and an unfavourable path of returns.</p>
</abstract>

Investment risk and retirement income security are constant bedfellows. This paper provides estimates of investment risk for defined contribution (DC) plan members to illustrate the importance of compounding (both positive and negative) during the accumulation phase of retirement saving and associated retirement income during the decumulation phase. In addition to workers being exposed to investment risk via their DC plan, older workers face significant COVID-19 related headwinds in the labour market. The cresting of investment risk with the current pandemic may create a lost generation of those approaching retirement (and recently retired) through lower contribution rates and an unfavourable path of returns.

Covid-19, Investment Risk, and Retirement Security

Financial Planning Research Journal

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Covid-19, Investment Risk, and Retirement Security"}

Investment risk and retirement income security are constant bedfellows. This paper provides estimates of investment risk for defined contribution (DC) plan...

Covid-19, Investment Risk, and Retirement Security

Published Online: Mar 19, 2024

Page range: 8 - 20

Received: Aug 26, 2020

Accepted: Dec 09, 2020

DOI: https://doi.org/10.2478/fprj-2020-0001

© 2020 Michael E. Drew, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.