AFS Annual Meeting 2018

Recent research has identified that mortality salience has significant impacts on annuity purchase decisions, including the decision to avoid purchasing annuities and the decision to purchase annuities with a bequest provision.  This study investigates whether mortality salience will also influence the broader issue of an individual’s asset decumulation decision in retirement.  Theoretical models from psychology and economics suggest that it will. Using a randomly assigned experimental test, we find that increasing mortality salience increases the desire to retain assets in retirement, reducing the preferred spending rates in retirement.  Understanding the role of mortality salience on decisions about asset decumulation in retirement can be beneficial to academic researchers and financial planners.

Author(s): Yi Liu, Russell N. James, III