After examining an array of approaches to determining a spending rule for retirees, the authors propose the annually recalculated virtual annuity. Each year, one should spend (at most) the amount that a freshly purchased annuity�with a purchase price equal to the then-current portfolio value and priced at current interest rates and number of years of required cash flows remaining�would pay out in that year. Investors who behave in this way will experience consumption that fluctuates with asset values, but they can never run out of money.
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