Friday, September 04, 2009


Laddered Solution to Fears About Retirement Income

The collapse of financial markets has left clients nearing retirement in a state of high anxiety. Many portfolios have shrunk 40% in the past year, and the crisis may be far from over. Even the notion that investing in equities will outperform bank deposits over time is being challenged.

Enter the concept of laddered annuities.

In a recent study, "Variable Payout Annuities and Dynamic Portfolio Choice in Retirement," published in the Journal of Pension Economics and Finance, Olivia Mitchell, a professor of insurance and risk management at the Wharton School at the University of Pennsylvania, argued that by laddering the purchase of immediate annuities — or buying annuities gradually over time while keeping the rest of a portfolio invested in a mix of equities and bonds—clients can substantially increase the likelihood of meeting their retirement income goals...

INN: Laddered Solution to Fears About Retirement Income

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