Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions

48 Pages Posted: 8 Oct 2018

See all articles by Robert L. Clark

Robert L. Clark

North Carolina State University - Poole College of Management

Robert G. Hammond

North Carolina State University - Department of Economics

David Vanderweide

North Carolina General Assembly - Fiscal Research Division

Date Written: October 2018

Abstract

Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which households might benefit most from each annuity option. Comparing retirees who chose different annuities, we find that these groups of retirees report very different levels of well-being in retirement.

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Suggested Citation

Clark, Robert L. and Hammond, Robert G. and Vanderweide, David, Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions (October 2018). NBER Working Paper No. w25129. Available at SSRN: https://ssrn.com/abstract=3262392

Robert L. Clark (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-515-5560 (Phone)
919-515-5564 (Fax)

Robert G. Hammond

North Carolina State University - Department of Economics ( email )

Raleigh, NC 27695-8110
United States

David Vanderweide

North Carolina General Assembly - Fiscal Research Division ( email )

301 N Salisbury St.
Raleigh, NC 27601
United States

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