Portfolio Composition and Financial Security in Retirement

Nicole Black (), Anthony Harris (), David W. Johnston () and Trong-Anh Trinh ()
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Nicole Black: Centre for Health Economics, Monash Business School, Monash University
Anthony Harris: Centre for Health Economics, Monash Business School, Monash University
David W. Johnston: Centre for Health Economics, Monash Business School, Monash University
Trong-Anh Trinh: Centre for Health Economics, Monash Business School, Monash University

No 2026-01, Working Papers from Centre for Health Economics, Monash University

Abstract: This paper examines how the composition of financial resources relates to financial hardship and financial satisfaction among retired households. Using 23 waves of a nationally representative Australian panel, we distinguish between government pensions, private income, liquid financial assets, housing wealth, and debt. In fixed-effects models that exploit within-individual changes over time, liquid financial assets are strongly associated with lower financial hardship and higher financial satisfaction, while other forms of wealth show little independent association. We additionally examine responses to health shocks and find that liquid assets significantly attenuate their adverse financial effects, providing direct evidence of a buffering role. These results indicate that retirees with similar total wealth may experience different financial outcomes depending on portfolio composition, and suggest that adequacy assessments based on aggregate wealth or income replacement rates alone may overlook an important source of financial vulnerability.

Keywords: Retirement adequacy; Financial resilience; Financial hardship; Liquidity; Health shocks (search for similar items in EconPapers)
JEL-codes: D14 H55 I31 J14 (search for similar items in EconPapers)
Date: 2026-02
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