A goal of saving for retirement is to have enough money to live comfortably for the rest of one's life. Increased longevity and volatile financial markets mean that individuals must pay special attention to their investment portfolios, to insure that they do not outlive their assets.
Retirees may want to build more certainty into planning their distributions from retirement plans and investments. A new generation of analyses can help determine what options are best. Research by John Ameriks, Ph.D., Senior Research Fellow, TIAA-CREF Institute, and two other scholars, published in the December 2001 issue of the Journal of Financial Planning, discusses devising the optimal retirement portfolio.
Addressing the need to maintain income, the researchers designed the study to measure:
- the probability that particular allocations will provide
inflation-adjusted income for life, and
- whether annuitizing part of the portfolio helps or hinders
that probability.
"People spend a lot of time configuring retirement portfolios to hedge market risk when they should be just as concerned about hedging longevity risk," says Ameriks.
At this seminar Dr. Ameriks discussed the sustainability of investment portfolio withdrawals. Topics included asset allocation of retirement portfolios, payout solutions and estate planning benefits.
Click here for a summary article on the research study, which appeared in the Winter 2002 issue of Quarterly, a TIAA-CREF Institute publication.
