Abstract
The combination of aging population and increasing life expectancy have created a global challenge for funding of retirement. Individuals are becoming increasingly responsible for funding and managing a larger proportion of their retirement. SeLFIeS is a bond innovation to meet this need and is designed to replicate the payout pattern of a pension in retirement. Purchased during work life, SeLFIeS decisions require only knowledge that individuals already have, and thus addresses the major challenge of lack of financial literacy. Complex decisions are simply folded into an easy calculation of how many bonds to buy to meet their retirement goal.
Issuing SeLFIeS provides a large-scale efficient domestic source for funding Sustainable Development Goals because its payout pattern matches the cash flow pattern from infrastructure investments essential for SDGs*.
* SDG: Sustainable Development Goals
** SeLFIeS: Standard-of-Living indexed, Forward-starting, Income-only Securities
A paper for this lecture is available here.
Further recommended reading:
- Merton, R. C. and Muralidhar, A., “A Six-Component Integrated Approach to Addressing the Retirement Funding Challenge,” Journal of Investment Management, Vol. 18, No.4, December 2020.
- Merton, R. C. and Muralidhar, A., “SeLFIES: A New Pension Bond and Currency for Retirement,” Journal of Financial Transformation 51 (May–June 2020), 1–12.