TY  - UNPD
A1  - Horneff, Wolfram J.
A1  - Maurer, Raimond
A1  - Mitchell, Olivia S.
A1  - Stamos, Michael Z.
T1  - Money in motion: dynamic portfolio choice in retirement
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,21
N2  - Retirees confront the difficult problem of how to manage their money in retirement so as to not outlive their funds while continuing to invest in capital markets. We posit a dynamic utility maximizer who makes both asset location and allocation decisions when managing her retirement financial wealth and annuities, and we prove that she can benefit from both the equity premium and longevity insurance in her retirement portfolio. Even without bequests, she will not fully annuitize; rather, her optimal stock allocation amounts initially to more than half of her financial wealth and declines with age. Welfare gains from this strategy can amount to 40 percent of financial wealth (depending on risk parameters and other resources). In practice, it turns out that many retirees will do almost as well by purchasing a variable annuity invested 60/40 in stocks/bonds. JEL Classification: G11, G23, G22, D14, J26, H55
T3  - CFS working paper series - 2007, 21 
KW  - portfolio choice
KW  - private financial services
KW  - insurance
KW  - personal finance
KW  - retirement policies
KW  - social security
KW  - Portfolio Selection
KW  - Portfoliomanagement
Y1  - 2007
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/1038
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-44551
IS  - May 2007
ER  -