The Drawdown of Personal Retirement Assets
37 Pages Posted: 15 Mar 2011 Last revised: 16 Mar 2011
There are 2 versions of this paper
The Drawdown of Personal Retirement Assets
The Drawdown of Personal Retirement Assets
Date Written: January 11, 2011
Abstract
How households draw down the balances that they accumulate in retirement saving accounts such as 401(k) plans and Individual Retirement Accounts can have an important effect on the contribution of these accounts to retirement income security. This paper presents evidence on the pattern of withdrawals at different ages. We find a relatively modest rate of withdrawals prior to the age at which households are required to take minimum required distributions. Only seven percent of PRA-owning households between the ages of 60 and 69 take annual distributions of more than ten percent of their PRA balance, and only 18 percent of PRA households in this age group make any withdrawals in a typical year. The rate of distributions rises sharply after age 70 ½, when minimum distributions are required. The proportion of PRA-owning households making a withdrawal jumps to over 60 percent by age 71, and crosses 70 percent a few years later. On average, households age 60 to 69 with PRA accounts withdraw only about two percent of their account balances each year, considerably less than the rate of return on account balances during our sample period. Even at older ages - after the required minimum distribution age - the percentage of balances withdrawn remains at about five percent.
JEL Classification: D14, E21, H30, J14
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Optimal Consumption and Investment with Capital Gains Taxes
By Robert M. Dammon, Harold H. Zhang, ...
-
Optimal Asset Location and Allocation with Taxable and Tax-Deferred Investing
By Robert M. Dammon, Harold H. Zhang, ...
-
Asset Allocation and Asset Location: Household Evidence from the Survey of Consumer Finances
-
Asset Allocation and Asset Location: Household Evidence from the Survey of Consumer Finances
-
The Transition to Personal Accounts and Increasing Retirement Wealth: Macro and Micro Evidence
By James M. Poterba, Steven F. Venti, ...
-
Asset Location in Tax-Deferred and Conventional Savings Accounts
By John B. Shoven and Clemens Sialm
-
Utility Evaluation of Risk in Retirement Saving Accounts
By James M. Poterba, Joshua D. Rauh, ...
-
The Location and Allocation of Assets in Pension and Conventional Savings Accounts