Annuitization in employer sponsored retirement plans

Investigators:

John Beshears, James Choi, David Laibson, and Brigitte Madrian, and Stephen Zeldes

Summary:

Despite the prediction of Yaari (1965) -- retirees should annuitize all of their wealth to insure against the possibility of outliving their savings -- the purchase of private annuities is rare. For example, the market for immediate annuities was only $11.8 billion in 2005 (National Association of Variable Annuities, 2006). Brown (2007) discusses the difficulties the “annuity puzzle” poses for economic theory.

Papers:

Beshears, J, Choi, JJ, Laibson, DI, Madrian, BC, Zeldes, SP (forthcoming). “What Makes Annuitization More Appealing?” Journal of Public Economics. NIHMS494287