Managing Retirement Incomes

Abstract

In this article we discuss the state of the literature relating to the decumulation of retirement wealth and the management of retirement incomes. On the one hand, life-cycle models that allow for strong bequest motives and for the effects of medical expense risks have been shown to be able to rationalize retirees’ wealth, income, and consumption trajectories. On the other, studies of individual asset choices and portfolio decisions seem to suggest low levels of financial literacy and engagement as well as non-negligible consequences of age-related cognitive decline on financial decision making. We argue that future work should try to reconcile these two sets of conflicting findings into a coherent and holistic evidence base to inform policy, because issues concerning the management of retirement incomes, and insurance against different risks in retirement more generally, will become increasingly important for future cohorts of retirees. Expected final online publication date for the Annual Review of Economics, Volume 14 is August 2022. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

The effects of pension reforms on physician labour supply: Evidence from the English NHS

“…Our results would then only capture the impacts of the change in labour supply incentives. However, based on a large amount of evidence that individuals often lack key knowledge about pension systems and do not act as economic theory may predict when making pension decisions (Liebman and Luttmer, 2015;Laibson, 1997;Banks and Crawford, 2022), we think it is likely that most senior doctors did not behave in this way. Instead, it is likely that it was being moved onto the new pension plan that made the details of the new plan more salient to senior doctors.…”

“…But the responsiveness of labor supply to changes in pension incentives for individuals who are not yet at retirement age is an open question. Individuals often appear either not to be fully aware of the details of pension systems (Mitchell, 1988;Arenas de Mesa et al, 2006;Crawford and Karjalainen, 2020), over-discount the future (Laibson, 1997) or do not process financial information well (Banks and Oldfield, 2007;Banks and Crawford, 2022). This potentially impacts the responses to pension incentives (Chan and Stevens, 2008;Bottazzi et al, 2006;Mastrobuoni, 2011;Liebman and Luttmer, 2015).…”

The effects of pension reforms on physician labour supply: Evidence from the English NHS

“…But the responsiveness of labor supply to changes in pension incentives for individuals who are not yet at retirement age is an open question. Individuals often appear either not to be fully aware of the details of pension systems (Mitchell, 1988;Arenas de Mesa et al, 2006;Crawford and Karjalainen, 2020), over-discount the future (Laibson, 1997) or do not process financial information well (Banks and Oldfield, 2007;Banks and Crawford, 2022). This potentially impacts the responses to pension incentives (Chan and Stevens, 2008;Bottazzi et al, 2006;Mastrobuoni, 2011;Liebman and Luttmer, 2015).…”