NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions

Robert L. Clark, Robert G. Hammond, David Vanderweide

NBER Working Paper No. 25129
Issued in October 2018
NBER Program(s):Economics of Aging

Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which households might benefit most from each annuity option. Comparing retirees who chose different annuities, we find that these groups of retirees report very different levels of well-being in retirement.

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Document Object Identifier (DOI): 10.3386/w25129

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