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The Dissaving of Annuity Wealth and Marketable Wealth in Retirement

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  • Mirer, Thad W

Abstract

This paper compares the automatic dissaving of annuity wealth with the discretionary dissaving of marketable wealth that would result from life-cycle consumption behavior by retired persons. In simulations of a life-cycle model based on the isoelastic utility function and realistic parameter values, the author finds that marketable wealth normally would be dissaved more rapidly than annuity wealth. This suggests that empirical findings that show the opposite relation--slow dissaving of marketable wealth being accompanied by faster dissaving of annuity wealth (or total wealth)--should not be interpreted as evidence that supports the life-cycle theory. Copyright 1994 by The International Association for Research in Income and Wealth.

Suggested Citation

  • Mirer, Thad W, 1994. "The Dissaving of Annuity Wealth and Marketable Wealth in Retirement," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(1), pages 87-97, March.
  • Handle: RePEc:bla:revinw:v:40:y:1994:i:1:p:87-97
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    Cited by:

    1. Sven H. Sinclair & Kent A. Smetters, 2004. "Health Shocks and the Demand for Annuities: Technical Paper 2004-09," Working Papers 15868, Congressional Budget Office.
    2. Leung, Siu Fai, 2001. "The life-cycle model of saving with uncertain lifetime and borrowing constraint;: characterization and sensitivity analysis," Mathematical Social Sciences, Elsevier, vol. 42(2), pages 179-201, September.
    3. Siu Fai Leung, 2000. "Why Do Some Households Save So Little? A Rational Explanation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 771-800, October.

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