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Bridge over ocean
1 January 2012 Financial Analysts Journal Volume 68, Issue 1

Making Retirement Income Last a Lifetime

  1. Stephen C. Sexauer
  2. Michael W. Peskin
  3. Daniel Cassidy

To enable investors to spend down the assets in their defined contribution
accounts more easily, the authors propose a decumulation benchmark comprising a
laddered portfolio of TIPS for the first 20 years (consuming 88 percent of
available capital) and a deferred life annuity purchased with the remaining 12
percent. This portfolio can be used directly by the investor (akin to indexing)
or as a benchmark for evaluating the performance of a more aggressive
strategy.

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