@article {Waringjor.2018.1.041, author = {M. Barton Waring and Laurence B. Siegel}, title = {What Investment Risk Means to You, Illustrated Strategic Asset Allocation, the Budget Constraint, and the Volatility of Spending During Retirement}, elocation-id = {jor.2018.1.041}, year = {2018}, doi = {10.3905/jor.2018.1.041}, publisher = {Institutional Investor Journals Umbrella}, abstract = {In our experience, many investment professionals don{\textquoteright}t articulate risk well to clients. This research uniquely and graphically reveals the nature of strategic asset allocation investment risk not only for single-period investors, but also for multi-period investors such as those whose savings are held for retirement. Using Monte Carlo simulations, we evaluate and picture the nature of that multi-period consumption risk with spending rules that are subject to a budget constraint and those that aren{\textquoteright}t (such as the 4\% rule). Risk in a multi-period context means that realized spending may increase with greater SAA risk, but it may instead be worse.}, issn = {2326-6899}, URL = {https://jor.pm-research.com/content/early/2018/10/05/jor.2018.1.041}, eprint = {https://jor.pm-research.com/content/early/2018/10/05/jor.2018.1.041.full.pdf}, journal = {The Journal of Retirement} }