@article {12533,
	title = {How Well Do Retirees Assess the Risks They Face in Retirement?},
	number = {IB$\#$22-10},
	year = {2022},
	institution = {Center for Retirement Research at Boston College},
	address = {Chestnut Hill, MA},
	abstract = {The brief{\textquoteright}s key findings are:

Retirees face many financial risks, such as outliving their money, investment losses, and unexpected health expenses.
How important are these risks and how well do retirees perceive them?
The analysis finds a big disconnect between how actual and perceived risks are ranked:Actual: 1) longevity; 2) health; and 3) market.
Perceived: 1) market; 2) longevity; and 3) health.
In short, retirees overestimate market volatility and underestimate how long they will live and their health costs.},
	keywords = {Financial risks, health costs, Retirement},
	url = {https://crr.bc.edu/briefs/how-well-do-retirees-assess-the-risks-they-face-in-retirement/},
	author = {Wenliang Hou}
}
@article {10961,
	title = {How Accurate Are Retirees{\textquoteright} Assessments of Their Retirement Risk?},
	number = {WP$\#$2020-14},
	year = {2020},
	institution = {Center for Retirement Research at Boston College},
	address = {Boston},
	abstract = {Retirees with limited financial resources face numerous risks, including out-living their money (longevity risk), investment losses (market risk), unexpected health expenses (health risk), the unforeseen needs of family members (family risk), and even retirement benefit cuts (policy risk). This study systematically values and ranks the financial impacts of these risks from both the objective and subjective perspectives and then compares them to show the gaps between retirees{\textquoteright} actual risks and their perceptions of the risks in a unified framework. It finds that 1) under the empirical analysis, the greatest risk is longevity risk, followed by health risk; 2) under the subjective analysis, retirees perceive market risk as the highest-ranking risk due to their exaggeration of market volatility; and 3) the longevity risk and health risk are valued less in the subjective ranking than in the objective ranking, because retirees underestimate their life spans and their health costs in late life.},
	keywords = {family risk, health risk, longevity risk, market risk, policy risk},
	url = {https://crr.bc.edu/working-papers/how-accurate-are-retirees-assessments-of-their-retirement-risk/},
	author = {Wenliang Hou}
}
@article {10627,
	title = {How Best to Annuitize Defined Contribution Assets?},
	number = {WP$\#$2019-13},
	year = {2019},
	institution = {Center for Retirement Research at Boston College},
	type = {Report},
	address = {Newton, MA},
	abstract = {Unlike defined benefit pensions that provide participants with steady benefits for as long as they live, 401(k) plans and Individual Retirement Accounts (IRAs) provide little guidance on how to turn accumulated assets into income.  As a result, retirees have to decide how much to withdraw each year and face the risk of either spending too quickly and outliving their resources or spending too conservatively and consuming too little.  Surveys of individuals{\textquoteright} plans and several recent studies suggest that people will not draw down their accumulations for fear that they will exhaust their money and be unable to cover end-of-life health care costs.  They also must consider how to invest their savings after retirement.  These are difficult decisions.

Better strategies are possible that will ensure a higher level of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with post-retirement investing.  Workers could use a portion of their 401(k) and IRA assets to purchase an immediate annuity that pays a fixed amount throughout their lives, typically starting at age 65.  Or they could purchase an advanced life deferred annuity (ALDA) that requires a smaller share of accumulated assets and begins payments at a later age like 85.  Alternatively, they could use their assets to delay claiming Social Security {\textendash} essentially purchasing an inflation-indexed annuity.  Right now, none of these three options is commonly used.  Very few workers choose to purchase immediate or deferred annuities (the first two options).  And few retirees appear to be deferring claiming in order to receive the maximum annuity income from Social Security {\textendash} most people simply retire earlier and claim immediately.

Increasing annuitization in a meaningful way would require embedding annuities in 401(k) plans, with annuitization as the default.  Recent proposed federal legislation, such as the SECURE Act (Setting Every Community Up for Retirement Enhancement), encourages plan sponsors to offer annuities in their plans by establishing a fiduciary safe harbor when specific statutory conditions are followed in selecting an insurance company.  This legislation does not address, however, the question of defaults or the possibility of using 401(k) assets to purchase additional Social Security benefits.   Moving forward on these fronts would require some consensus about the appropriate share of 401(k) assets to be annuitized and the best method for annuitizing them.

To address these issues, this paper compares the level of lifetime utility generated by alternative annuitization approaches {\textendash} immediate annuities, deferred annuities, and additional Social Security through delayed claiming.  The analysis also tests different assumptions for the share of initial wealth that participants use to purchase these products.},
	keywords = {Annuitization, contribution},
	url = {https://crr.bc.edu/working-papers/how-best-to-annuitize-defined-contribution-assets/},
	author = {Alicia H. Munnell and Gal Wettstein and Wenliang Hou}
}
@article {9029,
	title = {How Has Pension Income Changed Between 1992 and 2010?},
	number = {WP$\#$2016-3},
	year = {2016},
	institution = {Center for Retirement Research at Boston College},
	address = {Chestnut Hill, MA},
	abstract = {Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56. The analysis includes workers{\textquoteright} pension coverage during both current and past jobs. Defined contribution (DC) wealth is simply the current account balance. DC income is calculated by projecting current plan balances to retirement, assuming no further contributions, and assuming that households then annuitize. Defined benefit (DB) wealth and income are calculated by apportioning projected benefits to past and future service. },
	url = {http://crr.bc.edu/wp-content/uploads/2016/07/wp_2016-3.pdf},
	author = {Alicia H. Munnell and Wenliang Hou and Anthony Webb and Yinji Li}
}
