This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Morningstar Announces New Retirement Income Research

CHICAGO, Sept. 19, 2012 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced new research that quantifies how much additional retirement income, or "Gamma," investors can generate by making better financial planning decisions.

"Investors arguably put a lot of time and effort into selecting investment funds or managers they hope will outperform the market—the so called 'Alpha' decision. However, Alpha is just one of many important decisions that can have a significant effect on retirement income. We refer to the extra income an investor can earn by making better financial decisions as Gamma," said David Blanchett, head of retirement research for the Morningstar Investment Management division. "Unlike traditional Alpha, which can be hard to predict, any investor can achieve Gamma by following an efficient financial planning strategy."

In the paper, researchers focused on five fundamental financial planning decisions or techniques for retirees—optimal asset allocation based on total wealth; dynamic withdrawal strategy; product allocation (i.e., guaranteed income products versus traditional investment products); tax-efficient allocation and drawdown; and liability-driven investing. The researchers created a series of portfolios and drawdown strategies that employ these techniques as well as a base case scenario drawn from the practices of average U.S. investors. Through a series of simulations, the researchers found that a hypothetical retiree may generate approximately 29 percent more income using a Gamma-efficient retirement income strategy, which is equivalent to an annual arithmetic return increase of 1.82 percent, compared with the average base case strategy. Among the five types of Gamma tested, the researchers determined that using a dynamic withdrawal strategy was most important, followed by making tax-efficient allocation decisions.

Morningstar Associates has implemented these financial planning techniques in Morningstar ® Retirement Manager SM, the company's defined contribution advice and managed account service. The results from these simulations, while hypothetical in nature and not actual investment results or guarantees of future results, provide an important look at strategies designed to help retirees reach their goals. Combined, Morningstar's investment advisory affiliates are the largest providers of defined contribution managed accounts by participants served, managing accounts for approximately 800,000 participants.

To read the complete research paper, please visit http://global.morningstar.com/Gamma.

About Morningstar, Inc.Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on more than 385,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 8 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has more than $186 billion in assets under advisement and management as of June 30, 2012. The company has operations in 27 countries.

About Morningstar Investment ManagementThe Morningstar Investment Management division creates custom investment solutions that combine its award-winning research and global resources together with the proprietary data of its parent company. This division of Morningstar includes Morningstar Associates, Ibbotson Associates, and Morningstar Investment Services, which are registered investment advisors and wholly owned subsidiaries of Morningstar, Inc. The division provides comprehensive retirement, investment advisory, portfolio management, and index services for financial institutions, plan sponsors, and advisors around the world.

©2012 Morningstar, Inc. All Rights Reserved.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,124.13 +72.40 0.42%
S&P 500 1,985.06 +11.43 0.58%
NASDAQ 4,459.19 +34.4860 0.78%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs