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Retirement Advisor: Think Tank Takes On Retirement Income (Podcast)

by: SA For FAs

Think-tank economists are apt to have a different take on retirement-income issues, as we see in new research from Brookings. Here’s what I found to be most relevant for advisors:

Don’t pull an average age from a longevity table; look instead at the distribution of possible lifespans.

You can’t say that people hate annuities, because they used to love their pensions, which are annuities. Mental framing accounts for the difference in perceptions.

Households could substitute annuities for bonds, because they perform the same portfolio-stabilizing function, thus enabling a household to hold as much stocks as they would without an annuity.

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New retirement research Brookings makes some advisor-relevant points regarding how we look at longevity; how we frame lifetime income; and how we situate such income in a portfolio.

This podcast (5:38) reports that public-policy-oriented academics manage to arrive at a reasonable financial strategy for advisors to consider for their retired clients: namely, a healthy component of aggressive investments supplemented by, and made possible by, a guaranteed income component.