Ruin in Retirement: Running Out of Money in Drawdown Programs
10 Pages Posted: 10 May 2006
Abstract
This paper analyses income drawdown programs where individuals choose a starting level of income and consumption growth levels so that they are certain to run out of money at some age. We compare the consumption in such a drawdown program with the level of consumption from an annuity. Our analysis shows that for individuals to prefer the drawdown program to an annuity because of higher initial income levels, they must be willing to forego all consumption for a majority of their expected period of retirement.
Keywords: Retirement, Consumption, Annuity, Income Drawdown
JEL Classification: G20, G22, G23, J26, D90
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Comonotonic Approximations for Optimal Portfolio Selection Problems
By Jan Dhaene, Steven Vanduffel, ...
-
Comparing Approximations for Risk Measures of Sums of Non-Independent Lognormal Random Variables
By Steven Vanduffel, Jan Dhaene, ...
-
By Steven Vanduffel, Jan Dhaene, ...
-
On the Evaluation of Saving-Consumption Plans
By Steven Vanduffel, Jan Dhaene, ...
-
Consistent Assumptions for Modeling Credit Loss Correlations
By Jan Dhaene, M. J. Goovaerts, ...
-
Ruined Moments in Your Life: How Good are the Approximations?
By Jin Wang, Huang Huaxiong, ...
-
Optimal Approximations for Risk Measures of Sums of Lognormals Based on Conditional Expectations
By Steven Vanduffel, Xinliang Chen, ...
-
By Jan Dhaene, Steven Vanduffel, ...
-
On the Parameterization of the Creditrisk-Plus Model for Estimating Credit Portfolio Risk
By Antoine Vandendorpe, Hien Ngoc Ho, ...
-
Ordered Random Vectors and Equality in Distribution
By Ka Chun Cheung, Jan Dhaene, ...