Means-tested public pensions, portfolio choice and decumulation in retirement
Date
2013
Authors
Hulley, H.
McKibbin, R.
Pedersen, A.
Thorp, S.
Editors
Advisors
Journal Title
Journal ISSN
Volume Title
Type:
Journal article
Citation
Economic Record, 2013; 89(284):31-51
Statement of Responsibility
Conference Name
Abstract
Age Pension means-testing buffers retired households against shocks to wealth and may influence decumulation patterns and portfolio allocations. Simulations from a simple model of optimal consumption and allocation strategies for a means-tested retired household indicate that, relative to benchmark, eligible and neareligible households should optimally decumulate faster, and choose more risky portfolios, especially early in retirement. Empirical modelling of a Household, Income and Labour Dynamics in Australia panel of pensioner households confirms a riskier portfolio allocation by wealthier retired households. Poorer pensioner households decumulate at around 5 per cent p.a. on average; however, better-off households continue to add around 3 per cent p.a. to wealth, even when facing a steeper implicit tax rate on wealth.
School/Discipline
Dissertation Note
Provenance
Description
Access Status
Rights
Copyright 2013 The Economic Society of Australia