2012 Fellows Symposium – Education and Nudges: Research Implications for Retirement Income Security
On November 30, 2012, the TIAA Institute held a Fellows Symposium focused on research implications for retirement income security. Some 30 outstanding scholars and TIAA professionals participated in the event, hearing presentations on what makes annuitization more appealing and how financial literacy affects financial decision-making. The final part of the discussion was dedicated to research topics scholars would like to see the Institute address.
Discussion moderators and presenters included:
- Annamaria Lusardi, Denit Trust Distinguished Scholar in Economics and Accountancy, School of Business, George Washington University
- Olivia S. Mitchell, Professor of Insurance/Risk Management, Professor of Business Economics/Public Policy, International Foundation of Employee Benefit Plans Professor, University of Pennsylvania
- David P. Richardson, Senior Economist, TIAA Institute
- Paul J. Yakoboski, Senior Economist, TIAA Institute
- Stephen P. Zeldes, Benjamin Rosen Professor of Finance and Economics, Graduate School of Business, Columbia University
Among the research findings presented:
- The major obstacles to choosing an annuity are participants’ fears of losing control over their savings and worries that the annuity provider will fail. Allowing partial annuitization increases take-up rates.
- Most individuals prefer a payout stream that is flat or rising in real terms over one that declines over time (with the same expected present value).
- There’s substantial demand for annuities that provide “bonus” payments in a month of the participant’s choosing (funded by lower payments in the other months).
- Framing influences choices. Highlighting the loss of flexibility and control reduces take-up rates, as does describing annuities as an investment, rather than as an insurance policy.
- Financial literacy is very low across populations around the world.
- Risk is the most difficult concept for people to grasp.
- Increased financial literacy is positively associated with greater wealth and retirement security, pointing to the need for more financial education.