Tag: retirement portfolios
The brief’s key findings are: Retirees seeking safe investments generally prefer short-term deposits, which preserve capital but offer no guaranteed return. Fluctuating returns can jeopardize a household’s living standard if short-term interest rates fall. In contrast, bonds provide a guaranteed return and – if held to maturity – also preserve capital. The bottom line: bonds…
Abstract This paper develops a consumption and portfolio-choice model of a retiree who allocates wealth among four assets: a riskless bond, a risky asset, a real annuity, and housing. Unlike previous studies that treat health expenditures as exogenous negative income shocks, this paper builds on the Grossman model to endogenize health expenditures as investments in…
