Retirement Tontines: Using a Classical Finance Mechanism as an Alternative Source of Retirement Income

43 Pages Posted: 6 Jan 2021

See all articles by J. Mark Iwry

J. Mark Iwry

affiliation not provided to SSRN

Claire Haldeman

affiliation not provided to SSRN

William G. Gale

Brookings Institution

David John

AARP Public Policy Institute; NASI

Date Written: October 15, 2020

Abstract

We explore how a classical finance mechanism — the tontine — could help retirees manage their assets. Tontines are investment pools where members commit funds irrevocably and where the interests of members who die are given to those who survive. Tontines were popular in the U.S. in the late 19th and early 20th centuries, until they were effectively prohibited in response to insurance company mismanagement. Tontine-inspired products are receiving renewed attention around the world as efficient, transparent ways to finance retirement. Unlike fixed income annuities, tontine pooling does not guarantee future payments, but should pay more on average per dollar invested, with less costly regulation.

Suggested Citation

Iwry, J. Mark and Haldeman, Claire and Gale, William G. and John, David, Retirement Tontines: Using a Classical Finance Mechanism as an Alternative Source of Retirement Income (October 15, 2020). Available at SSRN: https://ssrn.com/abstract=3728262 or http://dx.doi.org/10.2139/ssrn.3728262

J. Mark Iwry

affiliation not provided to SSRN

Claire Haldeman

affiliation not provided to SSRN

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

David John

AARP Public Policy Institute ( email )

601 E. Street, NW
Washington, DC 20049
United States
2024343865 (Phone)

NASI ( email )

1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904
United States

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