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The analysis also found that income replacement ratios would increase if the retiree used 80% of the household's non-housing assets to purchase an immediate income annuity upon retirement. Because assets used to purchase annuities would no longer generate interest and dividends, the increase in income generated by using 80% of non-financial assets to buy an annuity was offset in part by a proportional reduction in interest and dividend income. If all of the households in the sample had used 80% of their non-housing assets to purchase income annuities, their median replacement ratios would have been about 15 to 17 percentage points higher, on average. In addition, using 80% of home equity and 80% of household non-housing assets to purchase immediate annuities would raise median replacement ratios over each of the first five waves of retirement to levels about 24 to 26 percentage points higher. The Social Security Bulletin is at http://www.ssa.gov/policy/docs/ssb/.
The analysis also found that income replacement ratios would increase if the retiree used 80% of the household's non-housing assets to purchase an immediate income annuity upon retirement. Because assets used to purchase annuities would no longer generate interest and dividends, the increase in income generated by using 80% of non-financial assets to buy an annuity was offset in part by a proportional reduction in interest and dividend income.
If all of the households in the sample had used 80% of their non-housing assets to purchase income annuities, their median replacement ratios would have been about 15 to 17 percentage points higher, on average.
In addition, using 80% of home equity and 80% of household non-housing assets to purchase immediate annuities would raise median replacement ratios over each of the first five waves of retirement to levels about 24 to 26 percentage points higher.
Rebecca Mooreeditors@plansponsor.com