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

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  • Ko, Hyungjin
  • Lee, Seungyun
  • Lee, Jaewook

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.

Suggested Citation

  • Ko, Hyungjin & Lee, Seungyun & Lee, Jaewook, 2024. "Sequence and longevity risks of South Korean retirees: Insights and potential remedies," Pacific-Basin Finance Journal, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:pacfin:v:83:y:2024:i:c:s0927538x24000143
    DOI: 10.1016/j.pacfin.2024.102263
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    Cited by:

    1. Ko, Hyungjin & Lee, Jaewook, 2024. "Can ChatGPT improve investment decisions? From a portfolio management perspective," Finance Research Letters, Elsevier, vol. 64(C).
    2. Ko, Hyungjin & Son, Bumho & Lee, Jaewook, 2024. "A novel integration of the Fama–French and Black–Litterman models to enhance portfolio management," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).

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