Working Paper
Retirement Investing: A New Approach
Zvi BodieWP2001-08
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Abstract — This paper proposes a new approach to investing for retirement that takes advantage of recent market innovations and advances in finance theory to improve the risk/reward opportunities available to individual investors before and after retirement. The approach introduces three new elements:
- It uses inflation-protected bonds to hedge a minimum standard of living after retirement.
- It takes account of a person's willingness to postpone retirement.
- It uses option "ladders" to lever growth in retirement income.
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