Analysis of investment choices for retirement

a new approach and perspective

Authors

  • V. Sivarama Krishnan School of Business, Cameron University, Lawton, OK 73505, USA
  • Shari Lawrence Asset Planning Services Inc.,298 Oakwood Drive, Mandeville, LA 70448,USA

DOI:

https://doi.org/10.1016/S1057-0810(01)00083-X

Keywords:

Long investment horizons, Retirement planning, Roth IRAs, Deductible IRAs

Abstract

This paper evaluates deductible individual retirement accounts (IRAs), Roth IRAs, non-deductible IRAs, and open taxable investments using equal initial after-tax investments for the different choices. The concept of a break-even tax rate at the time of withdrawal of funds is used to analyze optimal choice between the deductible IRA and the Roth IRA. The break-even tax rate is seen to be a decreasing function of rate of return on the investment and the investment horizon. Regarding non-deductible IRAs, and open taxable investments, the findings indicate that the non-deductible IRA is the optimal choice for individuals with long investment horizons. Copyright 2001 Published by Elsevier Science Inc.

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Published

2001-12-30

How to Cite

Krishnan, V. S., & Lawrence, S. (2001). Analysis of investment choices for retirement: a new approach and perspective. Financial Services Review, 10(1-4), 75–86. https://doi.org/10.1016/S1057-0810(01)00083-X

Issue

Vol. 10 No. 1-4 (2001): Financial Services Review

Section

New Original Submission

License

Copyright (c) 2001 Elsevier Science Inc.

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