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The Retirement Decision with Consideration of Part‐Time Work After Retirement

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  • Hong Mao
  • Krzysztof M. Ostaszewski
  • Zhongkai Wen

Abstract

In this article, we study the optimal retirement decision with part‐time‐work options. We use a model with different leisure preferences before and after the “official” retirement and calculate optimal leisure rates and consumption strategies, using numerical methods. Our simulated results indicate that the optimal retirement age is sensitive to the following parameters: initial wage, the annual growth rate of the wage, the market rate of return of individuals’ capital stock, the coefficient of leisure preference, and, especially, the discount rate. On the other hand, mortality improvement does not simply result in delay of the optimal retirement age. Instead, part‐time work after retirement, with balanced expected utilities of consumption and leisure, may also be an effective way to address the longevity risk.

Suggested Citation

  • Hong Mao & Krzysztof M. Ostaszewski & Zhongkai Wen, 2019. "The Retirement Decision with Consideration of Part‐Time Work After Retirement," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 42(1), pages 85-112.
    • Handle: RePEc:wri:journl:v:42:y:2019:i:1:p:85-112
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    Cited by:

    1. Johan Gustafsson, 2021. "Age-Targeted Income Taxation, Labor Supply, and Retirement," CESifo Working Paper Series 8988, CESifo.
    2. Gustafsson, Johan, 2021. "Age-Targeted Income Taxation, Labor Supply, and Retirement," Umeå Economic Studies 985, Umeå University, Department of Economics, revised 01 Mar 2021.

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