Factor Investing for Retirement with DFA's Mathieu Pellerin

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In this episode, we combine two of the topics we often cover on the podcast. We talk both retirement planning and factor investing with Dimensional Fund Advisors Senior Researcher Mathieu Pellerin. Mathieu has conducted extensive research in both areas and we discuss two of his excellent papers: "Investing for Retirement Income: A Comparison of Asset Allocations and Spending Strategies" and "How Targeting the Size, Value, and Profitability Premiums Can Improve Retirement Outcomes".

We discuss the difference in success rates between wealth focused and income focused retirement strategies, the balance between optimizing return and failure risk in retirement planning and how factors can help boost the chances of retirement success.

00:00 - Intro
01:54 - Why Mathieu has focused his research on retirement planning
04:40 - The major risks retirement investors face
09:30 - The different between wealth focused and income focused retirement strategies
13:06 - Spending strategies and landing points
17:34 - The balance between growth and failure rates
21:26 - The different outcomes and paths with different spending strategies
23:49 - Social security and retirement planning
27:00 - Factor investing for retirement
32:31 - How the size, profitability and value factors were selected for the paper
34:50 - Does the size premium exist?
38:04 - How factor exposure was maintained through the accumulation phase and in retirement
39:52 - Do factors increase sequence risk?
44:59 - Thoughts on the struggles of small-cap value in the past decade
50:10 - How Dimensional thinks about improving investor behavior
52:25 - The difference between defined contribution and defined benefit plans
54:29 - The one lesson Mathieu would teach the average investor

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