NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Planning Basics
Which of the following is a longevity risk faced by a retiree?
Longevity risk is the risk that a retiree lives longer than expected and exhausts the retirement corpus. Market declines, inflation and falling reinvestment rates are separate risks with their own names.
- AThe risk that equity markets fall just before retirement
- BThe risk that prices of goods rise faster than expected
- CThe risk of outliving the retirement corpusCorrect
- DThe risk that interest rates fall on reinvestment
Explanation
Longevity risk is living longer than the corpus can support. Market fall before retirement is sequence or market risk, rising prices is inflation risk, and falling reinvestment rates is reinvestment risk.
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