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Dimitris Papanikolaou is the John L. and Helen Kellogg Professor of Finance at the Kellogg School of Management at Northwestern University and a research associate at the National Bureau of Economic Research. He holds a PhD in financial economics from MIT and has published research in the Quarterly Journal of Economics, the Journal of Finance, and the Journal of Political Economy, among others.
Papanikolaou described three uncertainties he thinks about when planning his own retirement: how long he will live, whether inflation stays near 2% or runs higher, and whether taxes will need to rise given growing government debt.
He said common tools tend to address these risks only individually. Annuities can address longevity risk but not inflation, for example, while Treasury Inflation-Protected Securities (TIPS) can address inflation but leave income and tax questions unresolved.
He noted that many people under-save for retirement, in part because they don't maximize contributions to tax-advantaged accounts like 401(k)s and Roth IRAs.
He said stocks have historically outperformed bonds over the long run and can act as a partial inflation hedge, since corporate profits and prices tend to rise together, though this holds better over long horizons than short ones.
He said no single product fully addresses longevity, inflation, and tax risk together, and that combining multiple strategies tends to work better than relying on just one.
What three risks does Papanikolaou say individuals should plan around in retirement?
He named three: not knowing how long you'll live (longevity risk), uncertainty about future inflation, and uncertainty about future tax rates.
What did Papanikolaou say about combining strategies to manage retirement risk?
He said no single product addresses longevity, inflation, and tax risk at once, so combining multiple strategies tends to work better than relying on just one.
This article summarizes views shared by Dimitris Papanikolaou in this interview and does not constitute financial, tax, or investment advice. Consult a qualified financial professional before making retirement planning decisions.
Disclosures
The information on this page is provided for educational purposes only and is not intended as investment, legal, or tax advice. It is designed solely to illustrate how longevity-linked investment benefits may work under certain assumptions. Actual results will vary. All illustrations, examples, and case studies are hypothetical and are intended to demonstrate potential scenarios — not to predict or guarantee actual outcomes. They do not represent the performance of any individual investor, portfolio, or account.
Key Assumptions Used in the Illustrations
Life expectancy and mortality projections are based on the most recent Social Security Administration (SSA) tables available at the time of simulation.
In the event of death or early withdrawal, hypothetical scenarios assume that investors who exit early, or their estate in the event of death, may receive 75% of the lesser of the initial investment or current market value, plus 1% for each full year the account was active. Case studies assume standardized market growth of 8% annually and do not incorporate unexpected market volatility, inflation, changes in interest rates, or changes in an investor's personal circumstances.
Simulations may assume a 3% annual early withdrawal rate prior to payout or death. All figures shown are net of fees. No forecast, projection, or hypothetical return should be relied upon as a promise or representation of future performance.
Past performance is not indicative of future results. The 8% annual market growth rate used in illustrations is a standardized assumption for modeling purposes only and does not represent the historical or expected performance of any specific investment. Note that early or voluntary withdrawals by other participants can affect fund performance and the size of distributions, and that a higher-than-expected number of participants reaching payout milestones may reduce the per-participant benefit received.
Savvly's Longevity Benefit is not a bank product, not FDIC insured, not insured by any federal government agency, and not insurance; payout amounts are not guaranteed. Investment values may decline..
Savvly's Longevity Benefit may not be suitable for all investors. Eligibility to invest is subject to qualification requirements and not all investors will be eligible. Investors should carefully consider their investment objectives, risk tolerance, time horizon, and financial situation before investing. See savvly.com/disclosures for current eligibility criteria, fees, risks, withdrawal terms, and fund assumptions.
This content is published by Savvly, Inc. Savvly has a financial interest in the products described and this content should not be interpreted as independent financial research or analysis. Investors should carefully evaluate their own circumstances and consult a qualified financial professional before making any investment decision.
