Effect of lifetime uncertainty on consumption/investment with luxury bequest motives

Sungsub Choi, Sungjun Kim and Gyoocheol Shim

Finance Research Letters, 2016, vol. 17, issue C, 275-279

Abstract: We study optimal consumption/investment of a retiree who has luxury bequest motives and faces the nonnegative bequest constraint. His lifetime is uncertain but actuarially fair life insurance-annuity policies are available. We obtain a closed form solution by using a dynamic programming method, and investigate the effects of lifetime uncertainty and the presence of life insurance-annuity on the consumption/investment policies.

Keywords: Consumption; Investment; Luxury bequest; Lifetime uncertainty; Nonnegative bequest constraint; Dynamic programming method (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:17:y:2016:i:c:p:275-279

DOI: 10.1016/j.frl.2016.03.027

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