Optimal Retirement Asset Decumulation Strategies : The Impact of Housing Wealth
A considerable literature examines the optimal decumulation of financial wealth in retirement. We extend this line of research to incorporate housing, which comprises the majority of most households' non-pension wealth. We use VARs to estimate the relationship between the returns on housing, stocks, and bonds, and use simulation techniques to investigate a variety of decumulation strategies incorporating reverse mortgages. Under a wide variety of assumptions, we find that the average household would be as much as 33 percent better off taking a reverse mortgage as a lifetime income relative to what appears to be the most common strategy of delaying until financial wealth is exhausted and then taking a line of credit. It would be as much as 62 percent better off relative to not taking a reverse mortgage at all. Housing wealth displaces bonds in optimal portfolios, making the low rate of participation in the stock market even more of a puzzle
Year of publication: |
2013
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Authors: | Sun, Wei |
Other Persons: | Triest, Robert K. (contributor) ; Webb, Anthony (contributor) |
Publisher: |
[2013]: [S.l.] : SSRN |
Subject: | Vermögen | Wealth | Portfolio-Management | Portfolio selection | Altersgrenze | Retirement | Altersvorsorge | Retirement provision | Private Altersvorsorge | Private retirement provision | Theorie | Theory |
Saved in:
freely available
Extent: | 1 Online-Ressource (36 p) |
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Series: | |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 1, 2006 erstellt |
Other identifiers: | 10.2139/ssrn.2316939 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013077063
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