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Retirement duration maximization with survival time expectations

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  • Linden, Mikael

Abstract

Paper proposes a model of retirement duration maximization based on retiree’s ex-ante intended retirement age and subjective survival time estimate. The optimum result needs that retirement age is an increasing convex function of survival time estimate supporting postponed retirement age with longer intended retirement duration. As a result, the average actual observed retirement duration is less than the intended duration. The result is valid irrespectively of biasedness of subjective survival estimates

Suggested Citation

  • Linden, Mikael, 2022. "Retirement duration maximization with survival time expectations," MPRA Paper 115903, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115903
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    File URL: https://mpra.ub.uni-muenchen.de/115903/1/MPRA_paper_115903.pdf
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    References listed on IDEAS

    as
    1. Wolfe, John R, 1983. "Perceived Longevity and Early Retirement," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 544-551, November.
    2. Eytan Sheshinski, 2005. "Longevity and Aggregate Savings," Discussion Paper Series dp403, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    3. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    4. Owen O'Donnell & Federica Teppa & Eddy van Doorslaer, 2008. "Can subjective survival expectations explain retirement behaviour?," DNB Working Papers 188, Netherlands Central Bank, Research Department.
    5. Milevsky,Moshe A., 2006. "The Calculus of Retirement Income," Cambridge Books, Cambridge University Press, number 9780521842587, November.
    6. Eytan Sheshinski, 2006. "Note on Longevity and Aggregate Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 353-356, July.
    7. Wu, Shang & Stevens, Ralph & Thorp, Susan, 2015. "Cohort and target age effects on subjective survival probabilities: Implications for models of the retirement phase," Journal of Economic Dynamics and Control, Elsevier, vol. 55(C), pages 39-56.
    8. Alberto Palloni & Beatriz Novak, 2016. "Subjective survival expectations and observed survival: How consistent are they?," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 187-228.
    9. Mashfiqur R. Khan & Matthew S. Rutledge & April Yanyuan Wu, 2014. "How Do Subjective Longevity Expectations Influence Retirement Plans?," Working Papers, Center for Retirement Research at Boston College wp2014-1, Center for Retirement Research.
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    Cited by:

    1. Linden, Mikael & Väänänen, Niko, 2023. "Mean survival times and retirement ages," MPRA Paper 119344, University Library of Munich, Germany.

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    More about this item

    Keywords

    Optimal retirement age; intended retirement duration; subjective survival time estimates; convex function;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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