Annuitization Decisions of Retirees: The Role of Risk Aversion and Financial Advice

Review of Economic & Business Studies, p. 36, 2011

17 Pages Posted: 10 Feb 2015

See all articles by Swarn Chatterjee

Swarn Chatterjee

University of Georgia

John Salter

Texas Tech University

Nathaniel J. Harness

Texas A&M University - Department of Economics and Finance

Date Written: 2011

Abstract

This study utilizes a nationally representative proprietary dataset to examine the annuitization decisions of retirees. The results indicate that consulting a financial advisor, retirement duration, and risk aversion are positive predictors of annuity ownership. The results also indicate that retirees with defined benefit plans are more likely to own annuities. Additionally, the results suggest that households with retirement duration of ten years or longer are more likely to start receiving their annuity distributions. This paper contributes to the research on annuitization decisions of retirees. The unique contributions of our study include establishing the relationship between risk aversion, financial advice, and annuity ownership decisions of households using a nationally representative dataset. Our empirical model controls for a number of socioeconomic, demographic and income related variables that have been drawn from prior literature.

Keywords: Financial Planning, Financial Advice, Retirement, Risk Tolerance, Risk Aversion, Annuitization

JEL Classification: D14, D91, E2, G2, J1,

Suggested Citation

Chatterjee, Swarn and Salter, John and J. Harness, Nathaniel, Annuitization Decisions of Retirees: The Role of Risk Aversion and Financial Advice (2011). Review of Economic & Business Studies, p. 36, 2011, Available at SSRN: https://ssrn.com/abstract=2563224

Swarn Chatterjee (Contact Author)

University of Georgia ( email )

Athens, GA 30602-3622
United States

John Salter

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Nathaniel J. Harness

Texas A&M University - Department of Economics and Finance ( email )

College of Business and Technology
College Station, TX 77843-4353
United States

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