EconPapers    
Economics at your fingertips  
 

Consumption Behavior, Annuity Income and Mortality Risk of Retirees

Vesile Kutlu-Koc (), Rob Alessie and Adriaan Kalwij
Additional contact information
Vesile Kutlu-Koc: Munich Center for the Economics of Aging (MEA)

De Economist, 2017, vol. 165, issue 3, No 5, 349-380

Abstract: Abstract Previous empirical studies have found that individuals do not draw down their assets after retirement which is at odds with the predictions of a simple life cycle model without uncertainty. Hurd (Econometrica 57(4):779–813, 1989; Mortality risk and consumption by couples, 1999) explains such saving behavior of retired singles and couples by adding lifetime uncertainty to the simple life cycle model. We tested whether predictions about consumption during retirement of this extended life cycle model hold for a sample of older Americans. We used data from the Health and Retirement Study supplemented with data from the Consumption and Activities Mail Survey. In line with theory we found that, on average, total consumption is greater than their annuity income after retirement and that this difference increases with the level of initial wealth. For older singles but not for couples our results suggest that, as predicted by the extended theoretical model of Hurd, the on average negative consumption growth decreases with higher mortality rates.

Keywords: Life cycle model; Consumption; Mortality risk (search for similar items in EconPapers)
JEL-codes: C23 D91 I19 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10645-017-9301-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:decono:v:165:y:2017:i:3:d:10.1007_s10645-017-9301-z

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10645/PS2

DOI: 10.1007/s10645-017-9301-z

Access Statistics for this article

De Economist is currently edited by Rob Alessie, Bas ter Weel, Casper van Ewijk, Jan C. van Ours and Frank de Jong

More articles in De Economist from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-19
Handle: RePEc:kap:decono:v:165:y:2017:i:3:d:10.1007_s10645-017-9301-z