Behavioral Obstacles in the Annuity Market

  title={Behavioral Obstacles in the Annuity Market},
  author={Wei-F. Hu and Jason S. Scott},
As Baby Boomers enter retirement, they will look to the investment industry for ways to generate income from accumulated savings. Why most retirees do not purchase longevity insurance in the form of lifetime annuities is a long-standing puzzle. Mental accounting and loss aversion can explain the unpopularity of annuities by framing them as risky gambles where potential losses loom larger than potential gains. Moreover, behavioral anomalies can explain the prevalence of “period certain… CONTINUE READING

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