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dc.contributor.authorHorneff, Wolfram J.
dc.contributor.authorMaurer, Raimond H.
dc.contributor.authorMitchell, Olivia S.
dc.contributor.authorStamos, Michael Z.
dc.date.accessioned2007-08-14T13:25:06Z
dc.date.available2007-08-14T13:25:06Z
dc.date.issued2007-03
dc.identifier.urihttps://hdl.handle.net/2027.42/55451
dc.description.abstractRetirees confront the difficult problem of how to manage their money in retirement so as to not outlive their funds while continuing to invest in capital markets. We posit a dynamic utility maximizer who makes both asset location and allocation decisions when managing her retirement financial wealth and annuities, and we prove that she can benefit from both the equity premium and longevity insurance in her retirement portfolio. Even without bequests, she will not fully annuitize; rather, her optimal stock allocation amounts initially to more than half of her financial wealth and declines with age. Welfare gains from this strategy can amount to 40 percent of financial wealth (depending on risk parameters and other resources). In practice, it turns out that many retirees will do almost as well by purchasing a variable annuity invested 60/40 in stocks/bonds.en_US
dc.description.sponsorshipSocial Security Administrationen_US
dc.format.extent484067 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen_US
dc.publisherMichigan Retirement Research Center, University of Michigan, P.O. Box 1248, Ann Arbor, MI 48104en_US
dc.relation.ispartofseriesWP 2007-152en_US
dc.titleMoney in Motion: Dynamic Portfolio Choice in Retirementen_US
dc.typeWorking Paperen_US
dc.subject.hlbsecondlevelPopulation and Demography
dc.subject.hlbtoplevelSocial Sciences
dc.contributor.affiliationotherGoethe Universityen_US
dc.contributor.affiliationotherThe Warton Schoolen_US
dc.contributor.affiliationumcampusAnn Arboren_US
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/55451/1/wp152.pdfen_US
dc.owningcollnameRetirement Research Center, Michigan (MRRC)


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