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Should households base asset decumulation strategies on required minimum distribution tables?

MARC record
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LDR  00000cab a2200000 4500
001  MAP20130038872
003  MAP
005  20131120175247.0
008  131120e20131007esp|||p |0|||b|eng d
040  ‎$a‎MAP‎$b‎spa‎$d‎MAP
084  ‎$a‎2
1001 ‎$0‎MAPA20120006317‎$a‎Sun, Wei
24510‎$a‎Should households base asset decumulation strategies on required minimum distribution tables?‎$c‎Wei Sun, Anthony Webb
520  ‎$a‎Retired households must trade off the risk of outliving their wealth against the cost of unnecessarily restricting their consumption. Using numerical optimisation techniques, we compare two innovative rules of thumb: (1) consuming the age-related percentage of remaining wealth specified in the Internal Revenue Service (IRS) Required Minimum Distribution (RMD) tables, and (2) consuming the age-related percentage of remaining wealth specified in the IRS RMD tables PLUS interest and dividends, with alternative rules of thumb and with the theoretical optimal. We show that in models that incorporate uncertain investment returns, the second RMD strategy (spending age-related percentages of remaining wealth PLUS interest and dividends) performs better than plausible alternatives, such as spending the interest and dividends, consuming an inflation-indexed 4 per cent of initial wealth, or decumulating over the household¿s life expectancy. Importantly, except for more risk-averse single males, it also performs better than the purchase of a market-load inflation-indexed annuity, and approaches the theoretical optimum.
7730 ‎$w‎MAP20077100215‎$t‎Geneva papers on risk and insurance : issues and practice‎$d‎Geneva : The Geneva Association, 1976-‎$x‎1018-5895‎$g‎07/10/2013 Volumen 38 Número 4 - octubre 2013
856  ‎$y‎MÁS INFORMACIÓN‎$u‎mailto:centrodocumentacion@fundacionmapfre.org?subject=Consulta%20de%20una%20publicaci%C3%B3n%20&body=Necesito%20m%C3%A1s%20informaci%C3%B3n%20sobre%20este%20documento%3A%20%0A%0A%5Banote%20aqu%C3%AD%20el%20titulo%20completo%20del%20documento%20del%20que%20desea%20informaci%C3%B3n%20y%20nos%20pondremos%20en%20contacto%20con%20usted%5D%20%0A%0AGracias%20%0A