EDHEC-Princeton Goal-Based Investing Index – Retirement Income with a Cost-of-Living Adjustment – 2053

See the Retirement Income index with no adjustment – 2053

This version of the EDHEC-Princeton Retirement Goal-Based Investing Indices represents the value of a dynamic strategy that aims to offer high probabilities of reaching attractive levels of replacement income for 20 years in retirement while securing, on an annual basis, 80% of the purchasing power in terms of retirement income of each dollar invested. To this end, the strategy is invested in two building blocks: (i) the goal-hedging portfolio, which replicates the performance of the corresponding Goal Price Index, and delivers a stable replacement income, and (ii) the performance-seeking portfolio, which offers the upside potential needed to reach high income levels with high probabilities.

The income cash flows start in January 2053 and last 20 years. They include an adjustment for the cost of living. The index value moves every month because of fluctuations in interest rates and in the equity market.

 

 

 

Historical values

This figure displays the values of the index and its two building blocks since January 2018. The index value is set to 1 in January 2018. The usual disclaimer applies  – see the following link for more details

 

Monthly returns (%)
2018



Goal-hedging portfolio
Performance-seeking portfolio
Index
January
-8.58
5.66
4.80
February
-4.15
-4.78
-4.78
March
5.86
-3.43
-3.43
April
-3.11
2.97
2.97
May
2.96
3.21
3.21
June
4.68
-0.15
-0.15
July
-6.07
3.16
3.16
August
4.39
3.46
3.46
September
-8.48
0.96
0.96
October
n.a.
n.a.
n.a.
November
n.a.
n.a.
n.a.
December
n.a.
n.a.
n.a.

Weights at last rebalancing time

This figure displays the index composition at the last rebalancing time. The goal-hedging portfolio replicates the performance of the corresponding Goal Price Index. The performance-seeking portfolio is intended to deliver upside potential to achieve aspirational goals. The usual disclaimer applies  – see the following link for more details.

 

Historical weights

This figure displays the index composition since the inception date. The usual disclaimer applies – see the following link for more details

 

Estimated Success probabilities

This figure displays the probabilities of reaching goals for the index and for a target date fund with a deterministic glide path. The essential goal is to cap the annual loss in affordable retirement income to 20% at most. An aspirational goal consists in reaching a higher level of retirement income than at the inception date; it is expressed as a multiple (130%, 150% or 200%) of the initially affordable income level. Probabilities are estimated by simulating 10,000 scenarios for the future values of the index and the target date fund. The usual disclaimer applies – see the following link for more details

 

Retirement Income Calculator

The level of replacement income that corresponds to a given funding ratio depends on the size of retirement savings.

Enter retirement savings here: $

Based on the latest values of the EDHEC-Princeton Goal Price Index:

A funding ratio of 130% corresponds to a retirement replacement income of $ 0 per year plus an annual cost-of-living adjustment;

A funding ratio of 150% corresponds to a retirement replacement income of $ 0 per year plus an annual cost-of-living adjustment;

A funding ratio of 200% corresponds to a retirement replacement income of $ 0 per year plus an annual cost-of-living adjustment;

Disclaimer: The replacement income is an estimate based on the values of the EDHEC-Princeton Goal Price Index – Retirement Income with a Cost-of-Living Adjustment – 2053. The index is itself based on a model, and it does not represent the actual price of an annuity or a deferred annuity. Probabilities are based on the simulation of hypothetical scenarios for future asset returns and interest rates. The assumptions underlying the simulations may prove wrong ex-post.

Data download

Document download
Index construction rules

Disclaimer

EDHEC-Princeton Goal-Based Investing Indices
Retirement Income
September 2018 Returns (%)
Zone, Retirement year
Not adjusted
Cost-of-Living-adjusted
US, 2023
-0.47
-0.52
US, 2028
-0.18
-0.21
US, 2033
0.42
0.40
US, 2038
0.96
0.96
US, 2043
0.96
0.96
US, 2048
0.96
0.96
US, 2053
0.96
0.96
US, 2058
0.96
0.96

EDHEC-Princeton Goal-Based Investing Indices
Retirement Wealth
September 2018 Returns (%)
Zone, Retirement year
Not adjusted
Cost-of-Living-adjusted
US, 2023
0.27
0.27
US, 2028
0.20
0.20
US, 2033
0.59
0.59
US, 2038
0.96
0.96
US, 2043
0.96
0.96
US, 2048
0.96
0.96
US, 2053
0.96
0.96
US, 2058
0.96
0.96

 

 

 

 

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