How Will The Rise In 401(K) Plans Affect Bequests?

Alicia Munnell, Annika Sunden, Mauricio Soto () and Catherine Taylor

Issues in Brief from Center for Retirement Research

Abstract: This brief explores how the shift from defined benefit to defined contribution pension plans might affect bequests and thereby consumption and saving. Bequests can occur under two different types of circumstances: (1) individuals plan to leave an inheritance for their heirs (an intended bequest); or (2) individuals have no specific inheritance plans, but die before consuming all of their assets (an unintended bequest). This brief concludes that both types of bequests will increase as retirees receive more of their pension benefits as lump-sum amounts rather than as annuity payments, which provide a lifetime stream of income.

Date: 2002-11
New Economics Papers: this item is included in nep-lab
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