Journal of Economic Perspectives: Vol. 25 No. 4 (Fall 2011)


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The Composition and Drawdown of Wealth in Retirement

Article Citation

Poterba, James, Steven Venti, and David Wise. 2011. "The Composition and Drawdown of Wealth in Retirement." Journal of Economic Perspectives, 25(4): 95-118.

DOI: 10.1257/jep.25.4.95


This paper presents evidence on the resources available to households as they enter retirement. It draws heavily on data collected by the Health and Retirement Study. We calculate the "potential additional annuity income" that households could purchase, given their holdings of non-annuitized financial assets at the start of retirement. We also consider the role of housing equity in the portfolios of retirement-age households and explore the extent to which households draw down housing equity and financial assets as they age. Because home equity is often conserved until very late in life, for many households it may provide some insurance against the risk of living longer than expected. Finally, we consider how our findings bear on a number of policy issues, such as the role for annuity defaults in retirement saving plans.

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Poterba, James (MIT)
Venti, Steven (Dartmouth College)
Wise, David (Harvard U)

JEL Classifications

D14: Personal Finance
D31: Personal Income, Wealth, and Their Distributions
J26: Retirement; Retirement Policies


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