The Role of Annuity Markets in Financing Retirement [Hardcover]

Jeffrey R. Brown (Author), Olivia S. Mitchell (Author), James M. Poterba (Author), Mark J. Warshawsky (Author)

Book Description

Publication Date: December 1, 2001 | ISBN-10: 0262025094 | ISBN-13: 978-0262025096 | Edition: 1st

Dramatic advances in life expectancy mean that today's retirees must plan on living into their eighties, their nineties, and even beyond. Longer life expectancies are the symbol of a prosperous society, but this progress also means that some retirees will need to plan conservatively and cut back substantially on their living standards or risk living so long that they exhaust their resources. This book examines the role that life annuities can play in helping people protect themselves against such outcomes.A life annuity is an insurance product that pays out a periodic amount for as long as the annuitant is alive, in exchange for a premium. The book begins with a history of life annuity markets during the twentieth century in the United States and elsewhere. It then explores recent trends in annuity pricing and money's worth, as well as the economic value generated for purchasers of these products. The book explains the potential importance of inflation-protected annuities and stock-market-linked variable annuities in providing more complete retirement security. The concluding chapters examine life annuities in various institutional settings and the tax treatment of annuity products.

Editorial Reviews

Review

"Peter Diamond is one of the world's premier economists. This path-breaking book extends the traditional theory of optimal taxation to multi-period models. But it also considers how optimal tax rules/formulas need to be modified if agents are myopic, borrowing constrained, or time inconsistent. Diamond's findings will change how we think about and design public policy toward retirement saving and life-cycle labor supply."--Laurence J. Kotlikoff, Department of Economics, Boston University

"This book is an outstanding contribution to our knowledge base about the role of annuities in assisting households to finance their retirements. It's the first book I've seen to cover these topics."--Laurence J. Kotlikoff, Department of Economics, Boston University

"I warmly welcome the publication of this book. The authors provide both a good descriptive view of the US private annuity system and a thorough analysis of the factors influencing the value individuals attach to annuity payout streams."--Alain Jousten, Department of Economics, Université de LiègePlease note: "Universite de Liege" bears an accute accent over the final "e" in "Universite," and a grave accent over the first "e" in "Liege."

"Well-written and thorough; this is high-quality research on an important public policy issue. The book collects the results of an impressive research agenda in one place."--William M. Gentry, Graduate School of Business, Columbia University

"Life annuities can be extremely valuable and useful financial products. They can make retirement planning easier and more efficient. At the same time, they are not widely understood. The four authors of this book have produced the most authoritative and comprehensive examination of life annuities ever written. One can literally learn all there is to know about life annuities by reading this book. I recommend it to financial planners, academics, public policy makers, and anyone trying to understand theseimportant financial contracts. This book is a tour de force."--John B. Shoven, Charles R. Schwab Professor of Economics, Stanford UniversityPlease note: Endorser gives permission for us to use the last four sentences by themselves, beginning with "The four authors...."

About the Author

Jeffrey R. Brown is Assistant Professor of Public Policy in the John F. Kennedy School of Government at Harvard University.

Mark J. Warshawsky is Director of Research for the TIAA-CREF Institute.

Olivia S. Mitchell is IFEBP Professor of Insurance and Risk Management in the Wharton School at the University of Pennsylvania.

Product Details

• Hardcover: 239 pages
• Publisher: The MIT Press; 1st edition (December 1, 2001)
• Language: English
• ISBN-10: 0262025094
• ISBN-13: 978-0262025096
• Product Dimensions: 9.2 x 6.3 x 0.7 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #2,238,222 in Books (See Top 100 in Books)

More About the Author

Mark J. Warshawsky is Director of Retirement Research at Towers Watson, a global human capital consulting firm. He conducts and oversees research on employer-sponsored retirement programs and policies, social security, financial planning and health care financing. He has written numerous articles published in leading peer-reviewed scholarly journals, practitioner publications, conference volumes and working papers, has organized several research conferences, and has testified before Congress on public policies relating to pensions, annuities and other economic issues. He is a co-author of the Fundamentals of Private Pensions, Ninth Edition, 2009, published by Oxford University Press, and of Retirement Income: Risks and Strategies, forthcoming, MIT Press. A member of the Social Security Advisory Board for a term through 2012, he is also on the Advisory Board of the Pension Research Council of the Wharton School. From 2004 to 2006, Dr. Warshawsky served as assistant secretary for economic policy at the U.S. Treasury Department. There he played a key role in the development of the Administration's pension reform proposals, particularly pertaining to the funding of single-employer defined benefit plans, which formed the basis of the Pension Protection Act of 2006. Dr. Warshawsky's research led directly to the 2001-2 regulatory reform of minimum distribution requirements for qualified retirement plans. He is the inventor of the life care annuity, a product innovation integrating the immediate life annuity and long-term care insurance. For that research, Dr. Warshawsky won a prize from the British Institute of Actuaries in 2001. He has also held senior-level economic research positions at the Internal Revenue Service, the Federal Reserve Board in Washington, D.C. and TIAA-CREF, where he established the Paul A. Samuelson Prize. Born in Chicago in 1958, Dr. Warshawsky received a Ph.D. in Economics from Harvard University and a B.A. with Highest Distinction from Northwestern University.

Customer Reviews

Most Helpful Customer Reviews

6 of 6 people found the following review helpful:

4.0 out of 5 stars Mensa reader, June 5, 2006

By 

ERL (US) - See all my reviews

This review is from: The Role of Annuity Markets in Financing Retirement (Hardcover)

This book is a actually a compilation of different academic studies, written at a graduate-level, which primarily analyzes the merits of variable annuities. It's not "light reading", unless you enjoy mathematical algorithms and tables of study findings. However, the writers all present extremely well-researched and pursuasive conclusions about the important value of variable annuities. If you have any reservations about annuities in general, you probably won't after reading this book.

5 of 11 people found the following review helpful:

5.0 out of 5 stars Annuity, June 2, 2004

By A Customer

This review is from: The Role of Annuity Markets in Financing Retirement (Hardcover)

Dramatic advances in life expectancy mean that people must plan their retirements on the assumption that they will live into their eighties, their nineties, or even beyond. Longer life expectancies are the symbol of a prosperous society, but this progress also means that some retirees will need to plan conservatively and cut back substantially on their living standards or risk living so long that they exhaust their resources. This book examines the role that life annuities can play in helping people protect themselves against such outcomes.