Clare, Andrew, Seaton, James, Smith, Peter Nigel orcid.org/0000-0003-2786-7192 et al. (1 more author) (2024) The Science of Flexible Retirement Choices:Switching Retirement Savings into an Annuity. Journal of Retirement. 160. ISSN 2326-6899
Abstract
In this paper we consider the choice that retirees might make between drawing down from their pension pot and the purchase of an annuity. A key finding of our research that in a world of ‘loss aversion’, across a very wide range of assumptions, there is almost always a ‘crossover point’ during retirement at which moving out of drawdown into an annuity can be the optimal strategy. This suggests that the pensions industry should investigate the construction of a hybrid, ‘flex-first, fix-later’ pension product. We show that a ‘hybrid’ approach can produce much higher levels of happiness, especially at older ages, than staying wholly in drawdown or from buying an annuity at the point of retirement.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | This is an author-produced version of the published paper. Uploaded in accordance with the University’s Research Publications and Open Access policy. |
Keywords: | Sequence Risk; Longevity Risk, Withdrawal Risk, Delayed Annuities, Adaptive Withdrawals, Residual Sum |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 26 Jan 2024 10:50 |
Last Modified: | 02 Feb 2025 00:08 |
Status: | Published |
Refereed: | Yes |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:208320 |
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