Tag: value of annuities
Although many economic models predict high annuitization rates, only a small portion of retirees hold an annuity. This discrepancy is known as the “annuity puzzle.” Many explanations have been advanced for this puzzle, all of them promoting reasons why individuals might not want to annuitize. This brief, which is based on a recent paper, analyzes…
Are annuities more valuable when interest rates are low? That seems counterintuitive. After all, annuities produce higher monthly incomes when interest rates are high. But consider the extreme case of a zero interest rate. That scenario eliminates the option of living off the income from investments in retirement. The choices come down to various alternativ…
