Annuity Planning and Consumption-Investment Choices in Retirement Planning

DOI

10.2991/jcis.2006.29How to use a DOI?

Keywords

Annuity; Annuitization;Consumption-investment selections;Utility; Optimization

Abstract

Annuities can be effective tools in managing longevity risk in retirement planning. This paper develops a framework that merges annuity purchase decisions with consumption-investment selections in retirement planning. After introducing a pricing model and a benefit payment model for an annuity, we construct a multi-period wealth evolution model. An optimization problem is formulated with an objective of maximizing life time utility of consumptions and wealth. Optimal decisions are determined as a trade off between consumption and investment among an annuity, a risky and a risk-free asset.

Copyright

© 2006, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Zhisheng Li
AU  - Aparna Gupta
PY  - 2006/10
DA  - 2006/10
TI  - Annuity Planning and Consumption-Investment Choices in Retirement Planning
BT  - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
PB  - Atlantis Press
SP  - 121
EP  - 124
SN  - 1951-6851
UR  - https://doi.org/10.2991/jcis.2006.29
DO  - 10.2991/jcis.2006.29
ID  - Li2006/10
ER  -