Products and Strategies for the Decumulation of Wealth during Retirement: Insights from the Literature

The question how individuals should (optimally) annuitize their wealth remains of high relevance in light of longevity risk and volatile capital markets. In this article, we first present traditional and innovative products and strategies for the decumulation of wealth during retirement, based on a review of 72 selected academic articles in peer-reviewed journals. We further identify relevant factors that generally influence the conception of these products from the retirees’ perspectives, and derive implications for product developers, before concluding with avenues of future research. Our results indicate that innovative suggestions often comprise tontine-like structures, exploit actuarial and accounting smoothing in various ways, defer annuitization to higher ages, or combine it with long-term care options, for instance. Key areas of future research in this field include the consideration of both insurer and retiree perspectives in the analysis of products, using behavioral considerations when evaluating the retirees’ perspective, and taking into account the impact of costs or expenses. While recent articles increasingly consider these aspects, manifold opportunities for future research remain.