Personalised drawdown strategies and partial annuitisation to mitigate longevity risk

Wen Chen, Aaron Minney, Peter Toscas, Bonsoo Koo, Zili Zhu and Athanasios A. Pantelous

Finance Research Letters, 2021, vol. 39, issue C

Abstract: Despite the importance of drawdown strategies under a defined contribution system with increased longevity risk, little guidance to retired and retiring members has been forthcoming from superannuation funds. This paper provides a do-it-yourself drawdown design for members of superannuation funds along with comparison studies on a range of retirement income strategies under an array of realistic scenarios. A stochastic economic scenario generator is used to simulate the uncertain outcomes of different drawdown strategies during retirement. The impact of annuitisation for mitigating longevity risk under government pension rules and the selection of personalised drawdown and annuitisation strategies for retirement are examined.

Keywords: Annuitisation; Drawdown strategy; Retirement income; Superannuation; Economic scenario generator; Longevity risk (search for similar items in EconPapers)
JEL-codes: C15 C53 G11 G22 H55 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:39:y:2021:i:c:s1544612320305596

DOI: 10.1016/j.frl.2020.101644

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