The Role of Annuitized Wealth in Post-Retirement Behavior
نویسندگان
چکیده
This paper develops a tractable model of post-retirement behavior with health status uncertainty and state veri cation di¢ culties. The model distinguishes between annuitized and non-annuitized wealth and features Medicaid assistance with nursing-home care. The analysis shows how to solve the potentially complex dynamic problem analytically, making it possible to characterize optimal behavior with phase diagrams. Results reveal that annuitization promotes self-insurance and that Medicaid has a strong inuence on incentives to hold annuities. We show the model can explain both rising cohort-average wealth after retirement and retirees reluctance to fully annuitize their liquid wealth in practice.
منابع مشابه
Annuitized Wealth and Post-Retirement Saving
We introduce a tractable model of post-retirement saving behavior in which households have a precautionary motive arising from uninsured health status risks. The model distinguishes between annuitized and non-annuitized wealth, emphasizes the importance of asset composition in determining optimal household behavior, and includes an extension allowing late-in-life exchange transactions among rel...
متن کاملThe Composition and Drawdown of Wealth in Retirement.
A s the “baby boomers” approach and enter their retirement years, the accumulation phase of their life-cycle is nearly over. Thus, the focus of many researchers, fi nancial services fi rms, and public policymakers concerned with retirement saving is shifting from the accumulation of resources while working to the drawdown of resources during retirement. Retired households are dependent on the a...
متن کامل4th International Research Conference
Annuities provide insurance against outliving one’s wealth. Previous studies have indicated that, for many households, the value of the longevity insurance should outweigh the actuarial unfairness of prices in the voluntary annuity market. Nonetheless, voluntary annuitization rates are extremely low. The proportion of the financial assets of elderly households that is compulsorily annuitized is...
متن کاملLifetime earnings, social security benefits, and the adequacy of retirement wealth accumulation.
The United States has traditionally depended on the so-called three-legged stool—Social Security, private pensions, and additional personal saving—to finance retirement, but all three legs are becoming increasingly creaky. Social Security and Medicare face long-term financial shortfalls, because of a combination of the imminent retirement of the baby-boom generation, generally lengthening life ...
متن کاملAdverse Selection in the Annuity Market and the Role for Social Security∗
This paper studies the role of social security in providing annuity insurance. I calculate the welfare cost of adverse selection in the annuity market using a life cycle model in which individuals have private information about their mortality. I calibrate the model to the current U.S. social security replacement ratio, fraction of annuitized wealth and mortality heterogeneity in the Health and...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2015