Making Retirement Income Last a Lifetime

TIAA-CREF Working Paper

Posted: 28 Nov 2001

See all articles by John Ameriks

John Ameriks

The Vanguard Group, Inc.

Robert Veres

Inside Information

Mark J. Warshawsky

Towers Watson; Mercatus Center at George Mason University

Multiple version iconThere are 2 versions of this paper

Date Written: August 7, 2001


Professional retirement planning advice relies to a great extent on the determination of how much retirement income can be provided by systematic withdrawals from an investment portfolio. Because future investment returns, inflation rates, and how long a retiree will live are unknown, one cannot know, with certainty, how much income a retirement portfolio can ultimately provide. Recent research has incorporated uncertainty regarding investment returns and inflation in estimating maximum safe portfolio withdrawal rates. However, uncertainty regarding length of life has not been fully considered. The goal of this article is to explore the sustainability of investment portfolio withdrawals using two distinct methodologies - historical analysis and Monte Carlo simulations - to address the risk of extreme longevity. The article also examines whether annuitizing a portion of client assets makes it more likely that retirees can enjoy higher incomes over longer retirements. The results of the analysis may lead financial advisors to reconsider recommendations regarding the structure of their clients' investment portfolios in retirement.

Suggested Citation

Ameriks, John and Veres, Robert and Warshawsky, Mark J., Making Retirement Income Last a Lifetime (August 7, 2001). TIAA-CREF Working Paper, Available at SSRN:

John Ameriks (Contact Author)

The Vanguard Group, Inc. ( email )

P.O. Box 2600
MS V36
Valley Forge, PA 19482-2600
United States
610-503-5676 (Phone)

Robert Veres

Inside Information ( email )

P.O. Box 820
Mars Hill, NC 28754
United States

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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