W.F.
Sharpe, Retirement Economics, October 2005
(Slides from a presentation at the Pension and Investments Defined
Contribution 401(k) Conference)
Slides from a presentation
arguing that expected utility theory
can lead to practical implications for strategies and products designed
for
those who have retired. In particular, theory suggests that some
retirees might
desire to purchase an insurance product that integrates an annuity with
long-term care insurance to provide payoffs not possible with separate
purchases of traditional annuities and long-term care insurance
products.
A working paper designed to
provide a formal framework for finding the
most desirable post-retirement financial plan for an individual or
family.
Based on a
public lecture given at Middlebury College, Vermont. An
overview of the current status of retirement financing and associated
public
policy issues.
A working paper showing that in a complete
market setting, any
post-retirement i nvestment and spending strategy can be implemented by
setting
up a series of lockboxes, one for each future year. Each box will have
an
initial amount of money and an investment strategy to be followed until
its
designated maturity year. At that point the investments are liquidated
and the
proceeds spent. Such an approach allows a retiree to act "in loco
parentis" for
his or her "future self", which may provide some protection against
financial
mistakes that could be made in later years.
A paper that contrasts the
financial economists' expected utility
approach with rules of thumb adopted by some practitioners. The
analysis shows
that some popular rules are inconsistent with expected utility
maximization
since they subject retirees to unavoidable non-market risk. The paper
also
describes the lockbox approach to retirement investing and spending.
An article by Bill Snyder
describing some of my work on
Post-retirement economics