Do individuals accept fluctuations in pension income?

Arbeitspapier

How to invest and decumulate wealth during retirement has far-reaching consequences for consumption during retirement. We conduct an online experiment among 2,500 individuals representative of the adult German population. First, we investigate the choice between phased withdrawal plans with varying riskiness resulting in volatile retirement income. We find that 40% of the participants choose some risk and thus, accept fluctuations in retirement income. Second, we analyze the choice between the selected withdrawal plan and a lifelong annuity. Overall 56% of the respondents switch to the annuity. Switching behavior is more prevalent among individuals who chose the risk-free and medium-risk withdrawal plans as compared to the risky plan. Anchoring and fluctuation frames have small and significant effects on plan choice.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 23-019

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Macroeconomics: Consumption; Saving; Wealth ; Social Security and Public Pensions ; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination ; Retirement; Retirement Policies
• Subject: Retirement planning ; phased withdrawal plans ; annuities ; framing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bucher-Koenen, Tabea ; Knebel, Caroline ; Weber, Martin
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/273467
• Last update: 10.03.2025, 11:44 AM CET