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When saving is not enough: The wealth decumulation decision in retirement

Pascal Kieren and Martin Weber

No 634, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: In this study, we investigate the wealth decumulation decision from the perspective of a retiree who is averse to the prospect of fully annuitizing her accumulated savings. We field a large online survey of hypothetical product choices for phased drawdown offerings and annuities. While the demand for annuities remains low in our sample, we find significant demand for phased withdrawal products with equity-based asset allocations and flexible payout structures. Consistent with the product choice, the most important self-reported considerations for the wealth decumulation decision are low default risk in the products they purchase, the size of the withdrawal rates, and flexibility in the timing of their withdrawal. As determinants of the decision of how much wealth individuals are willing to draw down, we identify consumers' attitudes towards future economic conditions, the extent to which they are protected against longevity risk, and their desire to leave bequests. Policy implications are discussed.

Keywords: retirement planning; phased withdrawal accounts; annuity puzzle (search for similar items in EconPapers)
JEL-codes: D14 G2 H55 J14 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-eur
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:634

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