We develop an equilibrium theory of employer-sponsored retirement plan design using a behavioral contract theory approach. The operation of the labor market results in retirement plans that generally cater to, rather than correct, workers' mistakes. Our theory provides new explanations for a...

The U.S. has long incentivized retirement saving in 401(k) and similar retirement accounts by permitting workers to defer taxes on contributions, levying them instead when retirees withdraw funds in retirement. This paper develops a dynamic life-cycle model to show how and whether...

We examine the drivers of variable annuity sales and the impact of a proposed regulatory change. Variable annuities are popular retirement products with over $2 trillion in assets in the United States. Insurers typically pay brokers a commission for selling variable annuities that ranges from 0%...

This paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the Special Issue. This introductory article and the papers in the Special Issue contribute to the debate on how...

This discussion paper reviews the needs of Australian retirees for financial products and services especially annuity products and financial advice; how they are currently met in Australia; briefly evaluate some alternatives; and identify obstacles to greater annuitisation. These obstacles include...

We document the pattern by which Canadians de-accumulate financial wealth during retirement – and find it rather puzzling. While the Modigliani lifecycle model can justify a variety of de-accumulation or draw down rates depending on risk preferences, the existence of asymmetric taxes imply...

We determine the optimal lifecycle purchasing strategy for deferred income annuities (DIAs), which are distinct from single-premium income annuities (SPIAs) for an individual who wishes to maximize the expected utility of her annuity income at a fixed time in the future. In contrast to the...

Shankar (2009) proposes a new investment strategy for retirees that bundles Treasury Inflation Protected Securities with a deferred annuity to guarantee real annual withdrawal rates of 5% or more with no risk of financial ruin. This strategy addresses three problems that retirees face: longevity...

This paper derives optimal consumption, investment, and annuitization patterns for retired households that have access to German-style participating payout life annuities (PLAs), allowing for capital market risks as well as idiosyncratic and systematic longevity risks. PLAs provide guaranteed...