Savings risk is the risk of spending too much now and not saving enough for later on in life. This risk is usually caused by a lack of proper planning which Ryals is helping the Arlts determine how much they would have to save given their various constraints of when they want to retire, how long they will live, expected returns before and during retirement, and whether or not to assume there will be anything left over of the portfolio after they die.
Note: CFA Institute almost always assumes the asset base in the portfolio will not be touched in retirement and that the investor will live off the total return of the portfolio instead of a combination of the total return and principal as in this question |
