Abstract:

We investigate the consequences of holding multiple accounts for payout deci-sions at retirement. Using proprietary data of retirees’ annuitization decisions, we find thatsmall accounts are more likely to be cashed out. We use occupation information as a proxyfor wealth to disentangle income from the multiple-accounts effect. We show that indivi-duals with high expected wages are more likely to annuitize overall but less likely toannuitize their small accounts (comparing to individuals with low wages). A laboratoryexperiment and an online experimental survey (with a large representative sample) sug-gest that the composition of multiple accounts affects the annuitization rates via the deci-sions regarding small versus large accounts