Annuity Planning and Consumption-Investment Choices in Retirement Planning
نویسندگان
چکیده
Annuities can be effective tools in managing longevity risk in retirement planning. This paper develops a framework that merges annuity purchase decisions with consumption-investment selections. After introducing a pricing model and a benefit payment model for an annuity, we construct a multi-period wealth evolution model. An optimization problem is formulated with an objective of maximizing life time utility of consumptions and wealth. Optimal decisions are determined as a trade off between consumption and investment among an annuity, a risky and a risk-free asset.
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تاریخ انتشار 2006