Posted: 4 Jun 2010
Date Written: December 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.
Suggested Citation: Suggested Citation
Bodie, Zvi and Detemple, Jerome, Life-Cycle Finance and the Design of Pension Plans (December 2009). Annual Review of Financial Economics, Vol. 1, pp. 249-286, 2009. Available at SSRN: https://ssrn.com/abstract=1599378 or http://dx.doi.org/10.1146/annurev.financial.050708.144317