Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing, and Risky Assets
Journal of Monetary Economics, Vol. 80, 2016
Boston College Center for Retirement Research Working Paper No. 2009-3
40 Pages Posted: 6 Mar 2008 Last revised: 19 May 2016
There are 2 versions of this paper
Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing, and Risky Assets
Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing, and Risky Assets
Date Written: May 17, 2016
Abstract
In a life-cycle model, a retiree faces stochastic health depreciation and chooses consumption, health expenditure, and the allocation of wealth between bonds, stocks, and housing. The model explains key facts about asset allocation and health expenditure across health status and age. The portfolio share in stocks is low overall and is positively related to health, especially for younger retirees. The portfolio share in housing is negatively related to health for younger retirees and falls significantly in age. Finally, out-of-pocket health expenditure as a share of income is negatively related to health and rises in age.
Keywords: Aging, Asset allocation, Life-cycle model, Medical expenditure, Saving
JEL Classification: D91, G11, I12
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing, and Risky Assets
-
To Leave or Not to Leave: The Distribution of Bequest Motives
By Wojciech Kopczuk and Joseph Lupton
-
To Leave or Not to Leave: The Distribution of Bequest Motives
By Wojciech Kopczuk and Joseph Lupton
-
Why Do the Elderly Save? The Role of Medical Expenses
By Mariacristina De Nardi, Eric French, ...
-
Why Do the Elderly Save? The Role of Medical Expenses
By Mariacristina De Nardi, Eric French, ...
-
By John Ameriks, Andrew Caplin, ...
-
By John Ameriks, Andrew Caplin, ...
-
Health and (Other) Asset Holdings
By Julien Hugonnier, Florian Pelgrin, ...
-
Optimizing the Equity-Bond-Annuity Portfolio in Retirement: The Impact of Uncertain Health Expenses
By Gaobo Pang and Mark J. Warshawsky
-
How Deep is the Annuity Market Participation Puzzle?
By Paula Lopes, Alexander Michaelides, ...