Improving Retirement Security with Dynamic Allocation Strategies using Retirement Bonds: The Case

• At the time of retirement, the individual converted the final savings balance to a 20-year real annuity/retirement income stream at the prevailing interest rates. [...] • The nominal yield curve is expected to shift upward from an initial level of 5% at the front end and 6% at the 30-year maturity to levels that are closer to the typical interest rate levels observed over long historical periods. [...] 16 Comparison with Other Alternatives • Investment Alternatives: • Static (Rebalanced): 60% Bovespa / 40 Treasury Bonds • Glidepath: Go from 90% to 30% allocation to Bovespa (vs T-Bonds) over 40 years • Glidepath +: Go from 90% to 30% allocation to Bovespa (vs RendA+) over 40 years • Intelligent Dynamic: Allocation to equities/RendA+ based on dynamic formula (M. [...] Only in the tails of the distribution does the static and Glidepath strategies offer advantages: The best 95th percentile upside potential is generated by the Glidepath with RendA+ • In the lowest absolute risk and risk-adjusted outcomes (Median/Standard Deviation, and Median/5% Shortfall metric), the Dynamic Intelligent dominates the others. [...] 18 Additional Research • Examine a Japan case study – Dynamic Strategies dominate • Examine the Aggressive GLIDeS – Dynamic Strategies dominate • Impact on Savings • can achieve similar replacement rates with lower savings with Dynamic Intelligent Strategies (Kobor and Muralidhar 2022) 19 Conclusions • Retirement planning is.