The Annuity Puzzle Revisited: Barriers, Behavior, and Policy Paths to Lifetime Income

Hal E. Hershfield, Suzanne Shu, Jeffrey Brown, Abigail Hurwitz, Moshe Arye. Milevsky, Olivia Mitchell and Tamiko Toland

No 35145, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Wealth decumulation decisions, or how to optimize consumption over an uncertain remaining lifespan, are among the most difficult people face. They involve intertemporal tradeoffs, uncertainty, complexity, and emotion, yet many consumers receive little formal guidance. A central challenge is securing lifetime income and avoiding outliving resources, particularly through life annuities that guarantee income for life. Standard economic models predict high demand for annuities, but in practice few individuals purchase them, a gap known as the annuity puzzle. This paper introduces annuities, examines limited adoption among consumers and plan sponsors, reviews leading explanations, and outlines approaches to increase uptake and improve decision quality.

JEL-codes: D14 G11 G23 H55 J26 (search for similar items in EconPapers)
Date: 2026-04
Note: AG PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w35145.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:35145

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w35145
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().