Tag: annuitization
As U.S. financial firms push toward embedding life annuities in 401(k) plans, it is useful to assess the risks, as well as the gains, associated with making annuitization the default distribution option. While default strategies have proven highly effective during the accumulation phase, approaches that work well for retirement saving may have unintended adverse consequences…
Although many economic models predict high annuitization rates, only a small portion of retirees hold an annuity. This discrepancy is known as the “annuity puzzle.” Many explanations have been advanced for this puzzle, all of them promoting reasons why individuals might not want to annuitize. This brief, which is based on a recent paper, analyzes…
