Education and Nudges: Research Implications for Retirement Income Security

TIAA-CREF Institute Fellows Symposium
TIAA-CREF Headquarters
New York, New York

November 2012 |

On Nov. 30, 2012, the TIAA-CREF Institute held a Fellows Symposium focused on research implications for retirement income security. Some 30 outstanding scholars and TIAA-CREF 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-CREF Institute
Paul J. Yakoboski, Senior Economist, TIAA-CREF 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.

Conference materials available for download:
Program Agenda (PDF)
Invitation (PDF)
Speakers’ Bios (PDF)
Participant List (PDF)

Presentation slides:
Financial Literacy and Financial Decision Making (PDF)

© 2013 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017