Nijman, Theo; Werker, Bas J.M.; Peijnenburg, J.M.J. - Tilburg University, Center for Economic Research - 2010
We analyze the effect of health cost risk on optimal annuity demand and consumption/savings decisions. Many retirees are exposed to sizeable out-of-pocket medical expenses, while annuities potentially impair the ability to get liquidity to cover these costs and smooth consumption. We find that...