Working Paper: NBER ID: w15805
Authors: Stavros Panageas
Abstract: Retirement benefit guarantees can ensure a minimum standard of living in retirement. I propose a framework to discuss the design of such guarantees. The model features a standard life-cycle setting, in which individual agents' choices can have negative external effects on public finances, whenever their retirement consumption drops below a minimum level. Within this framework, I derive two alternative forms of intervention that can efficiently deliver a minimum standard of living to retirees. According to the first policy, agents use part of their accumulated assets to purchase a claim providing a fixed income stream for the duration of their life. According to the second policy, they purchase an appropriately structured portfolio insurance policy.
Keywords: No keywords provided
JEL Codes: E21; G11; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| requiring retirees to purchase a fixed income stream (J26) | minimum consumption level (E21) |
| implementing a portfolio insurance policy (G52) | minimum consumption level (E21) |
| backward induction (C73) | optimal transfer processes (F16) |
| borrowing constraints (F34) | influence consumption behavior (D12) |