Immediate annuities provide insurance against outliving one’s wealth. Previous research has shown that this insurance ought to be valuable to risk-averse households facing an uncertain lifespan. But rates of voluntary annuitization remain extremely low. Many explanations have been offered for retired households’ reluctance to annuitize. One prominent explanation is that annuities suffer from a considerable degree of actuarial unfairness. That is, for the average household, the expected value of the income, discounted by a rate of interest and annual survival probabilities, is considerably less than the premium paid. But it seems likely that households are also influenced by a reluctance to give up access to their life savings...
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Publisher Info
Paper provided by Center for Retirement Research in its series Issues in Brief with number
ib2007-7-10.