Sustaining Retirement during Lockdown: Annuitized Income and Older American’s Financial Well-Being before and during the COVID-19 Pandemic

TitleSustaining Retirement during Lockdown: Annuitized Income and Older American’s Financial Well-Being before and during the COVID-19 Pandemic
Publication TypeJournal Article
Year of Publication2023
AuthorsSun, Q, Curnutt, G
JournalJournal of Risk and Financial Management
Volume16
ISSN Number19118074
Keywordsannuitized income, defined contribution plans, Financial well-being, longevity risk
Abstract

The landscape of employer-sponsored retirement plans in the U.S. has changed dramatically during the past few decades as more and more private-sector employers have decided to freeze or terminate traditional pension plans. Defined contribution (DC) plans became the primary choice or the only choice for employees to participate in employer-sponsored retirement plans. In the next ten to twenty years, the income from pension plans will only count for a third of the total retirement income for GenXers when compared to their baby boomer counterparts. It is important for research to provide evidence on how the change in retirement income resources impacts retirees’ retirement security and financial wellness. Using Health and Retirement Study (HRS) data before and during the COVID-19 pandemic, this study examines the association between annuitized income and various measures of older Americans’ financial well-being over time, particularly during the pandemic. This study finds that receiving annuitized income has a statistically significant relationship with reduced subjective financial well-being for both measurements, while only one of the measures of objective well-being, having liquid assets greater than the median household income, has a statistically significant positive relationship with receiving annuitized income. © 2023 by the authors.

DOI10.3390/jrfm16100432
Citation Key13611