Wharton Pension Research Council Working Papers


G. Victor Hallman

Document Type

Working Paper

Date of this Version



Managing retirement payouts generally revolves primarily around securing adequate retirement income and assuring the continuity of such income for as long as the retirees live. Many commentators have suggested that the most efficient strategy to deal with these issues for risk-averse retirees is to annuitize retirement benefits. However, these commentators recognize that relatively few retirees actually choose life annuitization (the so-called “annuity puzzle”). One reason for this is the bequest or inheritance motive which involves using income-tax-favored retirement plans to pass wealth to the heirs (probably children) of the retiree or to charity. This chapter discusses the concepts, strategies, and constraints on using tax-favored retirement plans as wealth transfer devices.


The published version of this Working Paper may be found in the 2008 publication: Recalibrating Retirement Spending and Saving.


retirement distribution, retirement security, annuity puzzle, tax-favored plans, inheritance

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2007 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

Included in

Economics Commons



Date Posted: 17 December 2019