Life Cycle Finance and the Design of Pension Plans
Annual Review of Financial Economics, Forthcoming
54 Pages Posted: 30 Apr 2009 Last revised: 6 Apr 2010
Date Written: June 11, 2009
This article reviews recent scientific literature on consumer financial decisions over the life cycle outlining its implications for the design of pension plans. It begins with a review of advances in the theory of rational financial planning and wealth management. It then summarizes the recent empirical literature on the actual behavior of households regarding saving, investing, and insuring their consumption in old age. Finally, it briefly comments on the practical implications of the theory for the design of pension systems and outlines areas of future research.
Keywords: Life cycle finance, portfolio choice, pension, consumption, leisure
JEL Classification: G11
Suggested Citation: Suggested Citation