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

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  • Stefano Castaldo

    (University of Padova)

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.

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  • Stefano Castaldo, "undated". "Retirement and investment decisions: evidence from the receipt of a liquidity infusion," "Marco Fanno" Working Papers 0313, Dipartimento di Scienze Economiche "Marco Fanno".
    • Handle: RePEc:pad:wpaper:0313
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    Keywords

    household investment decisions; retirement;

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