Good Strategies for Wealth Distribution in Retirement

13 Pages Posted: 10 Jun 2010

See all articles by Gaobo Pang

Gaobo Pang

Mark J. Warshawsky

Towers Watson; Mercatus Center at George Mason University

Date Written: June 8, 2010

Abstract

This analysis puts forward good wealth distribution strategies for individuals and couples in retirement, considering trade-offs of wealth preservation and income security. We search among strategies that combine systematic mutual fund withdrawals with purchases of fixed payout life annuities. The search looks at a rich range of tactics including ages for annuity purchase, withdrawal rates, degrees of annuitization, and initial asset allocations. These strategies produce retirement account balances and incomes and we evaluate them using stochastic simulations of asset and annuity returns with overlays of rare financial and economic catastrophes as well as bankruptcies of insurers.

Keywords: Mutual Fund, Annuity, Asset Allocation, Defined Contribution Plan, Retirement Income

JEL Classification: G11, G22, D14

Suggested Citation

Pang, Gaobo and Warshawsky, Mark J., Good Strategies for Wealth Distribution in Retirement (June 8, 2010). Available at SSRN: https://ssrn.com/abstract=1623308 or http://dx.doi.org/10.2139/ssrn.1623308

Mark J. Warshawsky

Towers Watson ( email )

Arlington, VA
United States

Mercatus Center at George Mason University

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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