The Future is Unbundled
Sequence-of-return risk can play havoc with an individual investor’s retirement income. The “fragile decade” – the five years before and after retirement begins – is a uniquely volatile time in a retiree’s life, because it can be unclear just how much money can safely be withdrawn from retirement accounts to sustain a long retirement as income distributions begin.
In his new white paper, “Unbundling Investments from Insurance to Solve for Lifetime Sequence-of-Return Risk,” American College of Financial Services Professor of Retirement Income Wade Pfau, PhD, explores this unique problem… and a contingent deferred annuity called Constance that could help solve it.
According to Dr. Pfau, retirees can “manage sequence risk by pooling their market risk and longevity risk through a contingent deferred annuity that provides the traditional risk pooling benefits of an annuity with a much smaller ‘annuity footprint,’ helping to overcome many of the traditional obstacles to annuity use.”
The white paper details the impact of sequence risk, and discusses how a protected solution like a contingent deferred annuity can be used to “wrap” the risk for better potential outcomes.