Personalised drawdown strategies and partial annuitisation to mitigate longevity risk

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

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

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.

Original languageEnglish
Article number101644
Number of pages10
JournalFinance Research Letters
Volume39
DOIs
Publication statusPublished - Mar 2021

Keywords

  • Annuitisation
  • Drawdown strategy
  • Economic scenario generator
  • Longevity risk
  • Retirement income
  • Superannuation

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