Lifetime Income for Women: A Financial Economist's Perspective

Lifetime Income for Women: A Financial Economist's Perspective

David F. Babbel
Financial Services

Forces are converging upon Americans today in what some have called the Perfect Financial Storm. Decreasing rates of return on Social Security contributions, the accelerating demise of defined benefit pensions, the transition of the baby boom generation into retirement, longer expected lifetimes, and a smaller post-baby boom generation, are converging to create a situation that is particularly precarious for women. This paper compares several approaches to deploying accumulated assets as you enter retirement and concludes that while lifetime income annuities may not be the perfect financial instrument, when compared against the risks and returns of other available choices for retirement income they dominate most situations. Dr. Babbel highlights how these factors especially apply to women and argues that the annuitization choice is even more important to their economic well being than it is to the male population.

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