Reports Outline Science and Technology Study Findings from University of Malawi (An optimal investment consumption model for retirees with no health insurance): Science – Science and Technology

2024 MAY 01 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Researchers detail new data in science and technology. According to news reporting from the University of Malawi by NewsRx journalists, research stated, “Retirees meet a number of problems as they are growing older which needs persistent attention. Hence, without a doubt, the outcomes of the financial markets influence the choices that people make when nearing retirement.”

Our news editors obtained a quote from the research from University of Malawi: “In our model, the stock price dynamics follow Geometric Brownian motion (GBM) and our goal was to optimize the expected discounted utility of consumption and terminal wealth whilst considering health expenses. The investment return process comprises risk free asset and risky assets, and the health expenses. We choose power utility functions where comprehensive solutions for Hyperbolic Absolute Risk Aversion (HARA) utility functions are obtained and optimal investment, consumption and health expenditure strategies are derived by applying dynamic programming and variable change technique on the Hamilton-Jacobi-Bellman (HJB) equations. In our numerical results it showed various effects of some economic and market parameters on the optimal investment, consumption and health expense strategies. The inflation price market risk governs the amount invested in stock, bond and also how much to be put in health to sustain a given period of the retiree’s lifetime. As the health welfare rate R increases, the proportion of wealth invested in the stock increases. We also investigated the effects of the high correlation coefficients and low correlation coefficients on consumption and income rate respectively.”

According to the news editors, the research concluded: “As the constant variance discounting coefficient increases, seasoned enterprise annuity retirees decrease their allocation to the risky assets. Finally, a numerical example is presented to depict the effects of financial parameters on the optimal investment strategy with health expenditure.”

For more information on this research see: An optimal investment consumption model for retirees with no health insurance. Heliyon, 2024,10(8):e29034. (Heliyon - http://www.heliyon.com). The publisher for Heliyon is Elsevier.

A free version of this journal article is available at https://doi.org/10.1016/j.heliyon.2024.e29034.

Our news journalists report that additional information may be obtained by contacting Nelson Dzupire, School of Natural and Applied Sciences, University of Malawi, P.O. Box 280, Zomba, Malawi. Additional authors for this research include John Mutepuwa.

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