The Cost of Annuities: Implications for Saving Behavior and Bequests
AbstractThe fact that most elderly U.S. individuals maintain a flat age-wealth profile, rather than buy individual life annuities, contradicts the standard life-cycle consumption model. Average expected yields on individual life annuities in the United States during 1968-83 were lower by 4.21-6.13 percent, or 2.43-4.35 percent after allowing for adverse selection, than yields on plausible alternative investments. Simulations of a model of saving and portfolio allocation show that, during the early retirement years, such yield differentials can account for the absence of annuity purchases even without a bequest motive. At older ages, the combination of such yield differentials and a bequest motive can do so. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 105 (1990)
Issue (Month): 1 (February)
Contact details of provider:
Web page: http://mitpress.mit.edu/journals/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If references are entirely missing, you can add them using this form.