Retirement and investment decisions: evidence from the receipt of a liquidity infusion

Stefano Castaldo ()
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Stefano Castaldo: University of Padova

No 313, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: I study household investment decisions to shed light on how people approach and plan for retirement. To address this topic I exploit a particular institutional context. In Italy, private and public sector employees receive a lump sum upon retirement. This exogenous shock to liquidity presents an opportunity to see how people re-balance their portfolios for retirement. Studying data from the Survey on Household Income and Wealth (SHIW) in the period 1993-2016, and comparing people marginally above and below the labor pension eligibility threshold, I find that new retirees increased investments in stocks and in housing. This result is determined by the receipt of the liquidity infusion and is robust to testing against a number of alternative explanations, including stock market entry costs and the increase in leisure time. These results suggest that newly retired have a long-term investment horizon.

Keywords: household investment decisions; retirement (search for similar items in EconPapers)
Pages: 57 pages
New Economics Papers: this item is included in nep-age and nep-lma
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