A change in deferred annuity prices will have a similar effect on the likelihood that a high-income or low-income male worker will achieve an adequate retirement income, according to Youngkyun Park.
Park, a researcher at the Employee Benefit Research Institute (EBRI), Washington, has written about the effects of changes in deferred annuity prices on income adequacy in a note distributed by EBRI.
Park looked at the possible effects of annuity prices on whether a male who is retiring at age 65 will have a 90% chance of having an adequate retirement income.
Park did not look at the effects of annuity prices on women, or on men retiring at different ages, but, when conducting simulations, he did consider factors such as general and long term care inflation rates, post-retirement health care cost estimates, anticipated annuity income, anticipated Social Security benefits, and post-retirement investment income.
Park calculated the multiple of final annual earnings needed for the 65-year-old male to have a 90%.chance of having adequate retirement income, if the male puts a specified percentage of assets in stocks and annuitizes a specified level of assets.
Under the baseline price assumptions, a man with final earnings of $16,932 who puts only 5% of assets in stocks would have to start with an amount equal to 33.3 times earnings to have a 90% chance of generating adequate retirement income.