NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Miscellaneous Aspects of Retirement Planning
Which risk refers to the possibility that a retiree outlives the savings accumulated for retirement?
Longevity risk is the risk that a retiree outlives their savings. Because people may live longer than planned, the corpus can be exhausted while expenses continue. Reinvestment, liquidity and concentration risks are different concerns that do not describe outliving savings.
- ALongevity riskCorrect
- BReinvestment risk
- CLiquidity risk
- DConcentration risk
Explanation
Longevity risk is the risk of living longer than expected so that the corpus is exhausted. Reinvestment risk concerns lower rates on maturing proceeds, liquidity risk concerns ability to convert to cash, and concentration risk concerns undiversified holdings.
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