The Composition and Drawdown of Wealth in Retirement
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jep.25.4.95.pdf
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785.12 KB
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Author(s)
Venti, Steven
Wise, David
Poterba, James Michael
Date Issued
2011
Journal
Journal of Economic Perspectives
Publisher
American Economic Association
Citation
Poterba, James, Steven Venti, and David Wise. “The Composition and Drawdown of Wealth in Retirement.” Journal of Economic Perspectives 25, no. 4 (November 2011): 95–118. © 2011 American Economic Association
Version
Final published version
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.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/jep.25.4.95
