The Science of Flexible Retirement Choices: Switching Retirement Savings into an Annuity

Andrew Clare, James Seaton, Peter Nigel Smith, Stephen Thomas

Research output: Contribution to journalArticlepeer-review


In this paper we consider the choice that retirees might make between drawing down from their pension pot and the purchase of an annuity. A key finding of our research that in a world of ‘loss aversion’, across a very wide range of assumptions, there is almost always a ‘crossover point’ during retirement at which moving out of drawdown into an annuity can be the optimal strategy. This suggests that the pensions industry should investigate the construction of a hybrid, ‘flex-first, fix-later’ pension product. We show that a ‘hybrid’ approach can produce much higher levels of happiness, especially at older ages, than staying wholly in drawdown or from buying an annuity at the point of retirement.
Original languageEnglish
JournalJournal of Retirement
Publication statusAccepted/In press - 19 Jan 2024

Bibliographical note

This is an author-produced version of the published paper. Uploaded in accordance with the University’s Research Publications and Open Access policy.


  • Sequence Risk; Longevity Risk, Withdrawal Risk, Delayed Annuities, Adaptive Withdrawals, Residual Sum

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