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Hidden Group Time Profiles: Heterogeneous Drawdown Behaviours in Retirement

Author

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  • Igor Balnozan
  • Denzil G. Fiebig
  • Anthony Asher
  • Robert Kohn
  • Scott A. Sisson

Abstract

This article investigates retirement decumulation behaviours using the Grouped Fixed-Effects (GFE) estimator applied to Australian panel data on drawdowns from phased withdrawal retirement income products. Behaviours exhibited by the distinct latent groups identified suggest that retirees may adopt simple heuristics determining how they draw down their accumulated wealth. Two extensions to the original GFE methodology are proposed: a latent group label-matching procedure which broadens bootstrap inference to include the time profile estimates, and a modified estimation procedure for models with time-invariant additive fixed effects estimated using unbalanced data.

Suggested Citation

  • Igor Balnozan & Denzil G. Fiebig & Anthony Asher & Robert Kohn & Scott A. Sisson, 2020. "Hidden Group Time Profiles: Heterogeneous Drawdown Behaviours in Retirement," Papers 2009.01505, arXiv.org, revised Dec 2021.
    • Handle: RePEc:arx:papers:2009.01505
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    File URL: http://arxiv.org/pdf/2009.01505
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