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The Composition and Drawdown of Wealth in Retirement

Author Info

Listed author(s):
  • 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

References listed on IDEAS
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  2. Jeffrey R. Brown & Jeffrey R. Kling & Sendhil Mullainathan & Marian V. Wrobel, 2008. "Why Don’t People Insure Late-Life Consumption? A Framing Explanation of the Under-Annuitization Puzzle," American Economic Review, American Economic Association, vol. 98(2), pages 304-309, May.
  3. Wise, David Alsgaard & Poterba, James M. & Venti, Steven F., 2011. "The Drawdown of Personal Retirement Assets," Scholarly Articles 4677548, Harvard Kennedy School of Government.
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  30. Jonathan D. Fisher & David S. Johnson & Joseph T. Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2007. "No Place Like Home: Older Adults and Their Housing," Journals of Gerontology: Series B, Gerontological Society of America, vol. 62(2), pages 120-128.
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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
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