Understanding the Annuity Puzzle: Why Retirees Often Avoid Annuities
Economic theory suggests that retirees should protect themselves against outliving their assets by purchasing life annuities. In return for a lump sum at purchase these financial products provide a guaranteed income stream for life, effectively insuring against the risk of depleting one’s savings—a concern known as longevity risk. Despite these theoretical benefits, we observe that […]
Are market valuations the most important factor for retirement income strategies?
The question remains as to whether historical withdrawal rates provide sufficient insight about what can reasonably be expected to work for more recent retirees.
Are Annuities (SPIAs) Okay When Interest Rates are Low?
Readers of my last blog entry, Annuities and Delayed Social Security, provided many valuable comments, prompting me to now write a follow-up post. Most of the discussion centered on a chart showing the relationship between annuity payout rates and interest rates. That chart was actually a last minute addition, as I saw the picture on […]
