On retirement time decision making

An Chen, Felix Hentschel and Mogens Steffensen

Insurance: Mathematics and Economics, 2021, vol. 100, issue C, 107-129

Abstract: Optimal timing of retirement is an important part of retirement planning. We consider three types of individuals distinguished by the way they use information when deciding the retirement time. For each of these types, we analyze two elements influencing the decision, the market model and the mortality model, and we study the impact of working with one combination or another. Based on analytical solutions to almost all the combinations, we reach a conclusion, even relevant for practical advice: Young individuals must prioritize the market model over the mortality model while for older individuals, it is the other way around.

Keywords: Optimal consumption and investment; Utility optimization; Precommitted, naive and sophisticated individuals; Mortality model; Stochastic market model (search for similar items in EconPapers)
JEL-codes: C61 D81 D91 G11 J26 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:insuma:v:100:y:2021:i:c:p:107-129

DOI: 10.1016/j.insmatheco.2021.05.002

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