Q: 15
Assume our typical 65-year-old investor likewise has adequate insurance coverage and a cash
reserve. Let’s also assume she is retiring this year. This individual will want less risk xposure than the
25-year-old investor, because her earning power from employment will soon be nding; she will not
be able to recover any investment losses by saving more out of her paycheck. Depending on her
income from social security and a pension plan, she may need some current income from her
retirement portfolio to meet living expenses. Given that she can be expected to live an average of
another 20 years, she will need protection against inflation. A risk-averse investor will choose:
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