Efficient Timing of Retirement
AbstractA fundamental question in personal finance is deciding when to retire. This article is a theoretical investigation within a conventional life-cycle setting. It finds two closed-form solutions to the retirement timing problem. One solution, based on an isoelastic form of the utility function and a non-negative rate of time preference, identifies nine variables that could affect the retirement decision. The other formula, based on a log form of the utility function and a zero rate of time preference, sees the number of variables reduced to four. This simplified formula is especially easy to interpret, and could be of particular use to empirical researchers and financial planners.
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Bibliographic InfoPaper provided by University of Sydney, School of Economics in its series Working Papers with number 03.
Date of creation: Feb 1999
Date of revision:
Other versions of this item:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
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