Abstract
Few retirees annuitize any wealth, a fact that has so far defied explanation within the standard framework of forward-looking, expected utility-maximizing agents. Bequest motives seem a natural explanation. Yet the prevailing view is that people with plausible bequest motives should annuitize. part of their wealth, and thus that bequest motives cannot explain why most people do not annuitize. any wealth. I show, however, that people with plausible bequest motives are likely to be better off not annuitizing any wealth at available rates. The evidence suggests that bequest motives play a central role in limiting the demand for annuities.
Original language | English (US) |
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Pages (from-to) | 226-243 |
Number of pages | 18 |
Journal | Review of Economic Dynamics |
Volume | 15 |
Issue number | 2 |
DOIs | |
State | Published - Apr 2012 |
Keywords
- Annuities
- Bequest motives
- Life-cycle model
ASJC Scopus subject areas
- Economics and Econometrics