Considering Pensions in Retirement Portfolio Construction

Even though pensions have declined over the past few decades, government employees and some private sector employees still receive pensions. If someone has a government pension that will replace 100% of their income in retirement, they may wonder how to approach it in terms of portfolio construction. While it may not be appropriate to consider the pension a bond in a portfolio, having a slightly more aggressive investment strategy may be permissible due to the guaranteed income from the pension. The risk capacity of the individual should be considered when determining the overall portfolio allocation.