RT Journal Article
SR Electronic
T1 Framing Lifetime Income
JF The Journal of Retirement
FD Institutional Investor Journals
SP 27
OP 37
DO 10.3905/jor.2013.1.1.027
VO 1
IS 1
A1 Jeffrey R. Brown
A1 Jeffrey R. Kling
A1 Sendhil Mullainathan
A1 Marian V. Wrobel
YR 2013
UL https://pm-research.com/content/1/1/27.abstract
AB We provide evidence that individuals optimize imperfectly when making annuity decisions, and that this result is not driven by loss aversion. Annuities are more attractive when presented in a consumption frame rather than in an investment frame. Highlighting the purchase price in the consumption frame does not alter this result. The level of habitual spending has little interaction with preferences for annuities in the consumption frame. In an investment frame, consumers prefer annuities with principal guarantees; this result is similar for guarantee amounts below, at, and above the purchase price. We discuss implications for the retirement services industry and its regulators.TOPICS: Retirement, wealth management, risk management