Insight: The Annuity Puzzle: Drivers of Annuitization Decisions, Behavioral Biases, and Potential Solutions to Under-Annuitization
By Nadine Gatzert
IDEAS IN THIS INSIGHT YOU CAN PUT INTO ACTION
Retirement investors and their financial advisors should be aware of potential behavioral biases in decision-making when it comes to annuitization. Increasing this awareness could allow investors to make a more rational choice and could reduce retirees’ longevity risk. Regulators and policymakers should strengthen the pension-related education in the population, provide support in decision-making for people with lower income or less education, and help structure annuities so consumers can find them more easily.
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About the Author:
Nadine Gatzert holds the Chair for Insurance Economics and Risk Management at the Friedrich-Alexander Universität Erlangen-Nürnberg in Nuremberg, Germany. Her research focus includes enterprise risk management as well as the valuation of life and pensions products from the perspective of insurers and customers.