- Specific Risk: Sometimes events only affect a single company or industry (the death of a company president may cause the value of the company's stock to drop, for instance). These kinds of things are almost impossible to predict, but diversifying investments can help people manage the effects of specific risks.
- Risk of Outliving Resources: The decisions that retiring workers make about how and when to draw down their pension and other assets determine in part whether their financial resources will last throughout retirement. Retirees who take the full income available risk outliving their assets, and may face living in poverty. On the other hand, by taking a reduced income, retirees may have to accept lower standards of living, but may die having needlessly held back on consumption. To avoid the risk of outliving their resources, Americans will need pension and other retirement income to sustain themselves for many years longer than in the past.
Further, the continuing trend towards pension plans with individual accounts has increased participants' responsibility for managing their own assets during retirement.
