Annuities
Retirees Should Look Beyond Their Investments For Income Planning
How exactly should retirees adjust their spending in response to changes in the value of their retirement portfolios? Countless variations on spending rules are discussed everywhere from research papers to internet discussion boards.
Read MoreThree Questions To Evaluate Longevity Risk For Retirees
Longevity risk—the risk of running out of assets before running out of time—is fundamental to retirement. We know about the distribution of longevity for the overall population, but an individual cannot know in advance precisely where he or she will fall in the distribution.
Read MoreDoes Your Mindset Affect How You Make Retirement Income Decisions?
The fields of behavioral finance and behavioral economics have uncovered various biases humans have which are great for day-to-day survival, but somewhat maladaptive for long-term investing.
Read MoreWhich Is Better for Retirement Income: Insurance or Investments?
Retirement planning experts have long debated the question: Which is better for retirement income: insurance or investments? Wade Pfau weighs in.
Read MoreAnnuity Pricing Sensitivity
With all of my discussions of annuities lately, it is worthwhile to also consider the sensitivity of annuity pricing to interest rates, gender and age-related mortality factors. Relationship Between Payout Rates and Interest Rates Figure 1 estimates the relationship between annuity payout rates and interest rates for 65-year old males, females, and opposite-gender couples with…
Read MoreSecuring Longevity Insurance Through Income Annuities
I have published a few pieces in the past couple weeks on how income annuities are priced and used. Understanding how to use annuities can be a great benefit when planning for retirement. Let’s consider another possibility.
Read MoreAnnuity Pricing 102
In today’s scenario, we’ll see what happens to the price of an annuity if:
1. We guarantee income will be provided for at least 10 years, regardless of whether the annuitant lives.
2. We provide a cash refund if the annuitant dies before at least receiving their full principal payment.
3. We include a cost-of-living adjustment for annuity payments.
Income Annuity 101
How are different types of annuities priced? It’s not as hard as you might think, as the basic recipe requires just three ingredients:
Read MoreRetirement Income Strategies with Annuities
Income annuities come in a variety of shapes and sizes. It can be overwhelming to know which one makes the most sense for your situation. In this column, I explore how income annuities work and what options are available.
Read MoreWhite Paper: Reduce Retirement Costs with Deferred Income Annuities Purchased Before Retirement
This study uses a methodology proposed by Milevsky (2006) to evaluate the impact of guaranteed income products on the cost of funding retirement and shows when, and for which clients, a deferred income strategy makes sense.
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