RT Journal Article
SR Electronic
T1 Asset Allocation with Annuities for Retirement Income Management
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 27
OP 40
DO 10.3905/jwm.2006.614434
VO 8
IS 4
A1 Paul D. Kaplan
YR 2006
UL https://pm-research.com/content/8/4/27.abstract
AB The author starts with a statement of the problem: at, in, or near retirement, investors need to make specific decisions about how they are going to use their savings to generate income during retirement and meet their estate goals when they die. If they withdraw too much each year for spending needs, they face the risk of running out of assets before they die. This is often called “longevity risk.” If they withdraw too little, they may not be able to meet their immediate expenses and support a certain lifestyle. Investors also need to decide how to invest their savings among asset classes and annuities. The author explores retirement income solutions in a simple setting to illustrate the trade-offs that retired investors face regarding how much income they can generate, how much short-term risk they are exposed to, how large an estate they can expect to leave, and how likely they are not to run out of assets before dying (the “success” probability).TOPICS: Retirement, risk management, performance measurement