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Money in Motion: Dynamic Portfolio Choice in Retirement
by Wolfram J. Horneff, Raimond H. Maurer, Olivia S. Mitchell and Michael Z. Stamos
WP 2007-152
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• Retirees must manage money in retirement so as to not outlive their funds while continuing to invest. We find that a hypothetical retiree will not fully annutize.
• Her optimal stock allocation amounts initially to more than half of her financial wealth and declines with age.
• In practice, it turns out that many retirees will do almost as well by purchasing a variable annuity invested 60/40 in stocks/bonds.
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