Texas Tech University

New Academic Research Finds Deferred Income Annuities Reduce Overall Cost of Funding Retirement


April 17, 2015

InsuranceNewsNet - Including a deferred income annuity (DIA) in a retirement portfolio helps reduce the cost of funding retirement while also offsetting risk and providing asset allocation flexibility, according to a new academic paper authored by Michael Finke, Professor and Director of Retirement Planning and Living, Texas Tech University and Wade Pfau, Professor of Retirement Income, American College.

To conduct the research, Finke and Pfau used Monte Carlo analyses to simulate how an investment portfolio designed to provide $100,000 of real lifetime income behaves, both with and without the use of a DIA. They ran more than 50,000 simulations and adjusted for longevity, stock and bond market performance and inflation.

Read more about the study here.