PT  - JOURNAL ARTICLE
AU  - Anran Chen
AU  - Steven Haberman
AU  - Stephen Thomas
TI  - Adaptive Retirement Planning, Sustainable Withdrawals, and Deferred Annuities
AID  - 10.3905/jor.2022.1.118
DP  - 2022 Aug 18
TA  - The Journal of Retirement
PG  - jor.2022.1.118
4099  - https://pm-research.com/content/early/2022/08/18/jor.2022.1.118.short
4100  - https://pm-research.com/content/early/2022/08/18/jor.2022.1.118.full
AB  - In this article, we integrate investment decisions in the post-retirement period with the inclusion of a deferred annuity (DA) to provide a lifetime decumulation solution. We use the perfect withdrawal rate (PWR) as a tool to make recommendations on withdrawal rates and asset allocations. We illustrate how cheap it is to use a DA to deal with longevity risk. Moreover, if an individual wants to maximize median PWR, they should allocate almost 100% in stocks. If an individual wants to maximize minimum PWR, they should allocate 40%–60% in stocks. A substantial stocks component should therefore be maintained throughout the retirement period as a new “normal” asset allocation.