How to invest your life savings to preserve capital and produce income

David F. Babbel and Craig B. Merrill belong to the Wharton Financial Institutions Center, where they study how to plan for retirement. As a summary of their research on retirees investing their life savings, they published a paper called Investing Your Lump Sum in Retirement.

This paper, published on August 14, 2007, called the current financial situation a “perfect storm” for retirees looking to invest their life savings and not outlive it. A perfect storm is the worst type of storm to be caught in.

They see several forces converging on those who are retired or who are near retirement. These forces are decreased levels of Social Security, an older baby boom generation, emerging post boomers, the increased American lifespan, and the decreased availability of pensions with definite benefits.

No one can stop any of these changes, whether demographic or economic, from occurring. All retirees can do, then, is work as hard as they can to plan well for retirement so their money lasts in spite of these factors.

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