SOA Paper Examines Retirement Income Reality Gap

A recent paper sponsored by the Society of actuaries provides an impressive and comprehensive review of retirement income-related research. 

The paper, titled Research and Reality – A Literature Review on Drawing Down Retirement Financial Savings, can be accessed by clicking here

Not surprisingly, the authors conclude that there is a significant gap between what is prescribed by theorists and what ends-up happening in reality.  Voluntary annuitization, for example, received near unanimous support from economic theorists, but equally unanimous aversion from consumers.  

The authors characterize this dilemma as a void between how retirees “should” think about retirement savings drawdown and how the “do” think about asset decumulation

Like many of the SOA publications, the paper provides a virtual roadmap for those who are interested in retirement income product development.  A brief sample of topics in this regard include inflation-adjusted longevity insurance coupled with a death benefit, and development of inflation-adjusted products in general. 

The authors also suggest that too little attention has been paid to draw down strategies that address unique personal circumstances such as those triggered by changes in health status. 

The paper is extraordinary in both scope and depth, and should serve as a useful resource for anyone thinking about product development and consumer engagement in the retirement income space. 

Source: Society of Actuaries