Originally published on TIAA.org.
On Friday, January 3rd, the TIAA Institute announced that Lee M. Lockwood of the University of Virginia was awarded the 24th Annual TIAA Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security. The Samuelson Award recognizes outstanding research that the private and public sectors can use to maintain and enhance Americans’ financial well-being.
The award-winning report, “Incidental Bequests and the Choice to Self-Insure Late-Life Risks” explores retirees’ saving and insurance choices particularly in relation to bequest motives and their effect on purchases of long-term care insurance and annuities.
Despite facing significant uncertainty about their lifespans and health care costs, most retirees do not buy annuities or long-term care insurance. In this report, Dr. Lockwood has found that retirees’ saving and insurance choices are inconsistent with standard life-cycle models but do match models in which bequests are luxury goods.
Dr. Lockwood found that bequest motives significantly increase saving and significantly decrease purchases of long-term care insurance and annuities. This highlights the importance of accounting for bequest motives in evaluating policies that affect people’s exposure to late-life risks.
“With this research, Lee Lockwood provides essential context to our understanding of retirees late-life financial behavior,” said Stephanie Bell-Rose, Head of the TIAA Institute. “The results of this study have implications on everything from changes to Social Security, Medicare and Medicaid, and numerous other policies affecting Americans as they retire.”
“I am honored to receive the Samuelson Award and to have my research recognized alongside that of the distinguished past winners,” said Dr. Lockwood. “You always hope that your research will help improve people’s lives, and I am grateful to the TIAA Institute for this recognition and its efforts to ensure that research findings improve Americans’ financial well-being.”
“This paper makes a substantive contribution to our understanding of how individuals use (or not) annuitization and insurance,” said Samuelson Award Judge Melinda Morrill, North Carolina State University (Poole College of Management). “It augments the life-cycle model to reevaluate the role of the bequest motive and puts a clear interpretation on what was seemingly contradictory evidence.”
Learn more about the Samuelson Award here.