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Annuity or Lump Sum: Getting Retiring Smokers to Make Better Savings Distribution Decisions

In: Behavioral Finance Beyond the Basics

Author

Listed:
  • Abigail Hurwitz
  • Yaniv Hanoch
  • Andrew Barnes
  • Orly Sade

Abstract

Despite the link between smoking and reduced lifespan, the effect of smoking on retirement savings withdrawal remains understudied. We investigate the impact of various leaflets on smokers’ retirement choices: (a) smoker vs. non-smoker life expectancies, (b) smoking’s health effects, (c) health impact with government’s advice to consider health upon retirement, or (d) combined smoker’s life expectancy and health info. Analyzing data from 2,000 smokers, we find that those informed about smoking’s lifespan impact, alone or with health consequences, were likelier to opt for lump sum over annuity. This suggests that informing smokers about smoking’s harms can influence their retirement choices.

Suggested Citation

  • Abigail Hurwitz & Yaniv Hanoch & Andrew Barnes & Orly Sade, 2024. "Annuity or Lump Sum: Getting Retiring Smokers to Make Better Savings Distribution Decisions," World Scientific Book Chapters, in: Itzhak Venezia & Rachel Calipha (ed.), Behavioral Finance Beyond the Basics, chapter 7, pages 161-183, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811290633_0007
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