How Quickly Do Older Adults Spend Their Wealth?

The gradual substitution of defined contribution (DC) retirement plans for defined benefit (DB) plans is forc-ing all who save for retirement to become investment managers. Once people retire, they have the added challenge of preserving sufficient assets to support themselves if they live longer than expected. Annuities can provide protection, but very few savers convert assets into annuities. They are advantageous to healthy individuals who will live a long time but overpriced for the average person. It would be worrisome if the lack of annuitization led retirees to overspend and become destitute if they live longer than expected. But recent research suggests that most retirees are extremely cautious when formu-lating their spending plans. Love, Palumbo, and Smit