Society of Actuaries Whitepaper on Drawing Down Retirement Financial Savings

[chinaco]

I have not completed it yet. But it is an interesting paper... so I thought I would post a link.

This is an actuarial papers so you know what they are going to suggest. Just letting everyone know so you don't read a 50+ page whitepaper and conclude is all a big conspiracy...


I am sure most people will find value in the information.

Research and Reality - A Literature Review on Drawing Down Retirement Financial Savings.
Sponsored By
Society of Actuaries
Pension Section
Prepared By
Bonnie-Jeanne MacDonald, PhD, FSA
Bruce Jones, PhD, FSA, FCIA
Richard J. Morrison, PhD
Robert L. Brown, PhD, ACAS, FCIA, FSA
Mary Hardy, PhD, FIA, FSA, CERA
June 2011

How DO Retirees Draw Down their Financial Savings? How COULD Retirees Draw
Down their Financial Savings? How SHOULD Retirees Draw Down their Financial
Savings? This paper examines these three questions by reviewing literature that
identifies and evaluates the tradeoffs among annuitization and self-managed drawdown
strategies. In doing so, we provide not only the perspective of the individual, but also
other stakeholders, such as family, government and financial institutions.

http://www.annuitythinktank.com/Portals/0/Documents/SOA white paper on income.pdf

 

[MasterBlaster]

I have not completed it yet. But it is an interesting paper... so I thought I would post a link.

This is an actuarial papers so you know what they are going to suggest. Just letting everyone know so you don't read a 50+ page whitepaper and conclude is all a big conspiracy...


I am sure most people will find value in the information.


http://www.annuitythinktank.com/Portals/0/Documents/SOA white paper on income.pdf

Lots of words there. Words words words...

When I got to the part about forcing people to annuitize their savings, I tuned out.

 

[chinaco]

Lots of words there. Words words words...

When I got to the part about forcing people to annuitize their savings, I tuned out.

I saw that too. It has a discussion about public policy. It makes a statement that says that there was some sort of mandatory annuitization for a time in the UK, but I did not see any details about... just a few comments and a research footnote.

I don't think that would go over in the US... and that is pretty much what they conclude.

Given the drawbacks of mandated annuitization, less extreme policy options have been recommended. To enhance retirement income security, for example, Brown (2009a) proposed an automatic annuitization program where annuitization would be the default option for all DC plans in the U.S. In this program, individuals would have the option to “opt-out”, thus preserving individual choice. In addition, only half of their accumulated wealth would be annuitized under the default, leaving the other half liquid to cover the unknown financial needs of retirement – such as an uninsured medical expense. Brown advised Congress to encourage this program by reducing the administrative burden for plan sponsors to offer this default option and, potentially, including automatic annuitization as a requirement for plan qualification. His paper provided detailed advice and step-by-step instructions to implement this program. Other possible policy options include encouraging or requiring plan sponsors to offer annuities as a distribution option, as well as offering favorable tax treatment to retirees who choose to purchase an annuity rather than to self-manage their drawdown (Brown and Warshawsky, 2001; Orth, 2008). Favorable tax treatment would be, however, potentially unfair for those who are rationally justified in not purchasing an annuity.

I heard some of the suggestions on the news a while back.

If they ever make those change.. I hope they don't make it retroactive.

 

[youbet]

What kind of compensation plan are you on? Commission based on annuity sales?
A salary for being a spokesperson? A fee per post?

 

[Animorph]

You mean SS isn't forced annuitization? Kind of quacks like it, even if it isn't technically.

 

[chinaco]

What kind of compensation plan are you on? Commission based on annuity sales?
A salary for being a spokesperson? A fee per post?

No... not at all.

Are you are just trolling for a reaction... or do you somehow feel threatened by information in a Pension Actuary research paper?

Either way... you are not being very constructive.

If you have some legitimate observations... let's hear 'em!