Demand for retirement products: An analysis of individual welfare

We study the demand for retirement products given that individuals have access to innovative plans depending on the realized survival probabilities, like tontines, in addition to traditional annuities. Preferences of agents are modeled by a generalized life-cycle utility function allowing for temporal risk aversion, i.e. agents are risk averse about their lifetime. We identify conditions for pricing bounds under which agents exhibiting temporal risk aversion prefer partial tontinization combined with partial annuitization to full annuitization. In an extended model with differential mortality and wealth, we analyze a utilitarian social planner’s retirement product demand, focusing on wealth transfers between the groups.

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