Links - Retirement Finance and Planning

QUOTE OF THE DAY

For many people, being asked to solve their own retirement savings problems is like being asked to build their own cars. —Richard Thaler, University of Chicago

CHART OF THE DAY

For a 60 year old -- what might happen to spending risk by adding a 25year deferred annuity to hedge longevity risk.  -RiversHedge

RETIREMENT FINANCE AND PLANNING

Report of the Commission on Retirement Security and PersonalSavings, Bipartisan Policy Center.  

Still a Better Bang for the Buck: An Update on the EconomicEfficiencies of Defined Benefit Pensions, SSRN, Pension Trustee Advisors, Inc., University of California, Berkeley - Institute for Research on Labor and Employment.  "New research finds that pension plans are a far more cost-efficient means of providing retirement income as compared to individual defined contribution accounts." 

Retirement Planning and the Impact of Investment MarketPerformance. Joe Tomlinson at Advisor Perspectives.  "Researchers have developed a number of different retirement withdrawal strategies to help manage investment risks; however, such strategies have not been adequately stress tested. I’ll compare strategies under stress to determine which strategies will be the most resilient."  

Why the Deferred Annuity Makes Sense, On the Annuity Puzzle.  SSRN, City U of London.  " We give an explanation for the low demand of immediate annuity at retirement, and uncover the high desirability of long-term deferred annuities for both retirees and working-age pensioners. "  

Tax Uncertainty and Retirement Savings Diversification, Brown et al Univ of Arizona.  

Tax-Efficient Spending Strategies From Retirement Portfolios, Kitces.  "For most retirees, the tax efficient liquidation of a retirement portfolio requires coordinating between both taxable brokerage accounts and pre-tax retirement accounts like an IRA or 401(k)."  

Should We Base Retirement Income Planning On HistoricalData? Pfau at Forbes.com " As William Bernstein pointed out in Part III of his “Retirement Calculator from Hell” series, post-1926 United States was fortunate to avoid experiencing any truly destructive political, economic, or military crises, which can wipe out a retiree’s wealth. A casual look through world history, though, suggests that such crises occur altogether too frequently."  

An Amateur's Hack To Figure Out How Much Spending Might Be Increased ByHedging Out Longevity Risk With An Annuity, by Me.  "[my hacker's guess is that]…in the presence of annuitization, or pooled risk, spending can increase a little bit [maybe 10-15% at roughly the same level of risk with age 85+ hedged out]"