Life Cycle Finance and the Design of Pension Plans

Annual Review of Financial Economics, Forthcoming

Boston U. School of Management Research Paper Series No. 2009-5

54 Pages Posted: 30 Apr 2009 Last revised: 6 Apr 2010

See all articles by Zvi Bodie

Zvi Bodie

Boston University

Jerome Detemple

Boston University - Questrom School of Business

Marcel Rindisbacher

Boston University - Questrom School of Business

Date Written: June 11, 2009

Abstract

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

Bodie, Zvi and Detemple, Jerome and Rindisbacher, Marcel, Life Cycle Finance and the Design of Pension Plans (June 11, 2009). Annual Review of Financial Economics, Forthcoming, Boston U. School of Management Research Paper Series No. 2009-5, Available at SSRN: https://ssrn.com/abstract=1396835

Zvi Bodie (Contact Author)

Boston University ( email )

12 Salisbury Road
Brookline, MA
United States
617 306 5556 (Phone)

HOME PAGE: http://www.zvibodie.com

Jerome Detemple

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

Marcel Rindisbacher

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

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