Retirement as a hedge

Pierre Pestieau and Uri M. Possen
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Uri M. Possen: Cornell University, Ithaca, NY, USA

No 2009043, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper explores the effect of letting individuals choose their retirement age in a world of uncertainty where there exist both defined benefit (DB) and de?ned contribution (DC) pension plans. The paper shows that giving individuals the flexibility to determine when to retire is an important tool for them when they are hedging against future uncertainty. It also finds that it is preferable to let people make their retirement decision after rather than before the uncertainty is lifted. Finally, it shows that shifting from DB to DC plans fosters the rate of activity of elderly workers.

Keywords: retirement decision; defined benefit defined contribution (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Date: 2009-07-01
New Economics Papers: this item is included in nep-age and nep-lab
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2009043

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