This paper describes the importance of defined contribution (DC) plan assets and Individual Retirement Account (IRA) assets to retirement security for older adults and examines how they dispose of these assets when they retire. The analysis is based on nationally representative data from the 1992-2002 waves of the Health and Retirement Study. Although a large and growing share of the older population has participated in DC plans and contributed to IRAs, the results show that few older adults elect to convert their balances into annuities when they retire. Careful modeling of the annuitization decision by older adults is required to understand the reasons behind the low rates of annuitization and to evaluate their implications for retirement security.
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