Decisions about life annuities are an important part of consumer decumulation of retirement assets, yet they are relatively underexplored by marketing researchers studying consumer financial decision making. In this article, the authors propose and estimate a model of individual preferences for life annuity attributes using a choice-based statedpreference survey. Annuities are presented in term...

This paper derives optimal equity-bond-annuity portfolios for retired households who face stochastic capital market returns, differential exposures to mortality risk and uncertain uninsured health expenses, and differential Social Security and defined benefit pension coverage. The results show that the health spending risk drives household portfolios to shift from risky equities to safer assets...

This paper proposes a computationally efficient algorithm for quantifying the impact of interest-rate risk and longevity risk on the distribution of annuity values in the distant future. The algorithm simulates the state variables out to the end of the horizon period and then uses a Taylor series approximation to compute approximate annuity values at the end of that period, thereby avoiding a c...

In defined contribution pension schemes, the financial risk is borne by the member: contributions are fixed in advance and the benefits provided by the scheme depend on the investment performance experienced during the active membership and on the price of the annuity at retirement, in the case that the benefits are given in the form of an annuity. Therefore, the financial risk can be split int...