Sequence and longevity risks of South Korean retirees: Insights and potential remedies

Hyungjin Ko, Seungyun Lee and Jaewook Lee

Pacific-Basin Finance Journal, 2024, vol. 83, issue C

Abstract: This study investigates the retirement landscape in South Korea, highlighting major challenges like sequence and longevity risks. Our analysis reveals that over half of South Koreans are not well-prepared for retirement. For example, retirees risk depleting 56.3% of their portfolio in 25 years, increasing to 97.6% in poor market conditions. We propose a dynamic withdrawal strategy to mitigate these risks, backed by empirical evidence. Additionally, we consider policy reforms like delaying the retirement age to enhance portfolio sustainability. This research is a significant contribution to discussions on effective retirement strategies, benefiting pension experts, regulators, policymakers, and retirees in South Korea.

Keywords: Retirement portfolio; Sequence-of-return risk; Longevity risk; Withdrawal strategy; Pension policy; Pension portfolio (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:83:y:2024:i:c:s0927538x24000143

DOI: 10.1016/j.pacfin.2024.102263

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