Retirement, Imperfect Annuity Markets and Aging

2010 ◽  
Author(s):  
Casper Worm Hansen ◽  
Lars Lønstrup
Keyword(s):  
Annuity Markets

scholarly journals Annuity Markets and Capital Accumulation

2019 ◽  
Vol 20 (1) ◽  
Author(s):  
Shantanu Bagchi ◽  
James A. Feigenbaum
Keyword(s):  
Old Age ◽  
Capital Stock ◽  
Early Life ◽  
Capital Accumulation ◽  
Substitution Effect ◽  
Income Effect ◽  
Substitution Effects ◽  
Income Effects ◽  
Annuity Markets ◽  
The One

AbstractWe examine how the absence of annuities in financial markets affects capital accumulation in a two-period overlapping generations model. Our findings indicate that the effect on capital is ambiguous in general equilibrium, because there are two competing mechanisms at work. On the one hand, the absence of annuities increases the price of old-age consumption relative to the price of early-life consumption. This induces a substitution effect that reduces saving and capital, and an income effect that has the opposite effect as households want to consume less when young, causing them to save more. On the other hand, accidental bequests originate from the assets of the deceased under missing annuity markets. The bequest received in early life always has a positive income effect on saving, but the bequest received in old age, conditional on survival, is effectively a partial annuity with both substitution and income effects. We find that when the desire to smooth consumption is high, the income effects dominate, so the capital stock always increases when annuity markets are missing. However, when the desire to smooth consumption is low, the substitution effects dominate, and the capital stock decreases with missing annuity markets.

scholarly journals Annuity Markets, Savings, and the Capital Stock

10.3386/w1250 ◽  
1983 ◽  
Author(s):  
Laurence Kotlikoff ◽  
John Shoven ◽  
Avia Spivak
Keyword(s):  
Capital Stock ◽  
Annuity Markets

Evidence on the workings of annuity markets

2008 ◽  
pp. 210-224
Author(s):  
Edmund Cannon ◽  
Ian Tonks
Keyword(s):  
Annuity Markets

The Role of Annuity Markets in Financing Retirement

ILR Review ◽  
2002 ◽  
Vol 56 (1) ◽  
pp. 185
Author(s):  
P. Brett Hammond ◽  
Jeffrey R. Brown ◽  
Olivia S. Mitchell ◽  
James M. Poterba ◽  
Mark J. Warshawsky
Keyword(s):  
Annuity Markets

Demand for life annuities from married couples with a bequest motive

2006 ◽  
Vol 5 (2) ◽  
pp. 197-229 ◽  
Author(s):  
CARLOS VIDAL-MELIÁ ◽  
ANA LEJÁRRAGA-GARCÍA
Keyword(s):  
Married Couples ◽  
Combined Effects ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Relevant Feature ◽  
Policy Makers ◽  
Life Annuity ◽  
Bequest Motive ◽  
Annuity Markets ◽  
Life Annuities

The aim of this paper is to explain the ‘annuities puzzle’ in greater depth by introducing the bequest motive. It will try to determine whether this motive really is a relevant feature influencing the demand for life annuities from married couples. With this aim in mind, we develop an optimization model of the utility provided by purchasing a life annuity with contingent survivor benefit or a joint survivor life annuity. Our model is based on that first put forward by Brown and Poterba (2000), to which we have added elements from other models, such as Friedman and Warshawsky's (1990) and Vidal and Lejárraga's (2004), which include the bequest motive. This will enable us to calculate the annuity equivalent wealth and the optimal percentage of wealth to annuitize in various contexts: the possibility of access to actuarially fair annuity markets, the inclusion of so-called market imperfections, and the assumption that couples already have part of their wealth in pre-existing life annuities. Numerical results are presented for the case of Spain. The bequest motive is found not to be a significant factor influencing the demand for annuities from couples. Indeed very few couples would be willing to purchase them once we take into account the combined effects of market imperfections, the possibility of pre-existing annuities and the bequest motive. These findings have repercussions for policy makers regulating defined contribution capitalization systems, which are complementary to defined benefit systems.

scholarly journals Annuity markets

2009 ◽  
Vol 14 (2) ◽  
pp. 144-145
Author(s):  
Lorenz van der Meij
Keyword(s):  
Annuity Markets

Social security is NOT a substitute for annuity markets

2014 ◽  
Vol 17 (4) ◽  
pp. 739-755 ◽  
Author(s):  
Frank N. Caliendo ◽  
Nick L. Guo ◽  
Roozbeh Hosseini
Keyword(s):  
Social Security ◽  
Annuity Markets
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