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The Composition and Drawdown of Wealth in Retirement

Author Info

  • 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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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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Find related papers by JEL classification:
  • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
  • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
  • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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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
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:

  1. 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.
  2. 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.
  3. Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2013. "How Portfolios Evolve After Retirement: Evidence from Australia," CAMA Working Papers 2013-40, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Mark Huggett & Greg Kaplan, 2012. "The Money Value of a Man," NBER Working Papers 18066, National Bureau of Economic Research, Inc.
  5. Davoine, Thomas, 2012. "Time constraints, saving and old age," Economics Working Paper Series 1221, University of St. Gallen, School of Economics and Political Science.
  6. 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.
  7. James M. Poterba, 2014. "Retirement Security in an Aging Society," NBER Working Papers 19930, National Bureau of Economic Research, Inc.

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