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The Composition and Drawdown of Wealth in Retirement

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  • James Poterba
  • Steven Venti
  • David Wise

Abstract

This paper presents evidence on the resources available to households as they enter retirement. It draws heavily on data collected by the Health and Retirement Study. We calculate the "potential additional annuity income" that households could purchase, given their holdings of non-annuitized financial assets at the start of retirement. We also consider the role of housing equity in the portfolios of retirement-age households and explore the extent to which households draw down housing equity and financial assets as they age. Because home equity is often conserved until very late in life, for many households it may provide some insurance against the risk of living longer than expected. Finally, we consider how our findings bear on a number of policy issues, such as the role for annuity defaults in retirement saving plans.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.4.95
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 25 (2011)
Issue (Month): 4 (Fall)
Pages: 95-118

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Handle: RePEc:aea:jecper:v:25:y:2011:i:4:p:95-118

Note: DOI: 10.1257/jep.25.4.95
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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Ahorro para el Retiro y Pensiones
    by Alejandro Villagomez in Tintero Económico Diario on 2012-04-23 02:17:00
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Cited by:
  1. Davies, James B. & Yu, Xiaoyu, 2013. "Impacts of Cyclical Downturns on the Third Pillar of the RIS and Policy Responses," CLSSRN working papers clsrn_admin-2013-20, Vancouver School of Economics, revised 29 Apr 2013.
  2. Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2013. "How Portfolios Evolve After Retirement: Evidence From Australia," Working Paper Series 11, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
  3. Mark Huggett & Greg Kaplan, 2012. "The Money Value of a Man," Working Papers 2012-009, Human Capital and Economic Opportunity Working Group.
  4. Renuka Sane & Susan Thomas, 2013. "In search of inclusion: informal sector participation in a voluntary, defined contribution pension system," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-022, Indira Gandhi Institute of Development Research, Mumbai, India.
  5. James M. Poterba, 2014. "Retirement Security in an Aging Society," NBER Working Papers 19930, National Bureau of Economic Research, Inc.
  6. Davoine, Thomas, 2012. "Time constraints, saving and old age," Economics Working Paper Series 1221, University of St. Gallen, School of Economics and Political Science.
  7. Donnelly, Catherine & Guillén, Montserrat & Nielsen, Jens Perch, 2014. "Bringing cost transparency to the life annuity market," Insurance: Mathematics and Economics, Elsevier, vol. 56(C), pages 14-27.

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