Inconsistent Retirement Timing

54 Pages Posted: 11 May 2016 Last revised: 21 Dec 2017

See all articles by Christoph Merkle

Christoph Merkle

Aarhus University

Philipp Schreiber

University of Mannheim - Finance Department

Martin Weber

University of Mannheim - Department of Banking and Finance

Date Written: December 20, 2017


In an online experiment with more than 3,000 participants, we measure time preference consistency and study actual and planned retirement timing decisions. Theory predicts that hyperbolic time preferences can lead to dynamically inconsistent retirement timing. We find that time inconsistent participants retire on average up to 2.2 years earlier than time consistent participants. Participants, who are not yet retired, decrease their planned retirement age as they grow older. This negative effect of age is about twice as strong for time inconsistent participants. The temptation of early retirement seems to rise as participants approach retirement. As a consequence, time inconsistent participants have a higher probability of regretting their retirement decision. In addition, they do not compensate for the loss of social security benefits by buying private pension insurance. Using data from a representative household survey (German SAVE panel), we find similar results.

Keywords: Retirement Timing, Time Preferences, Hyperbolic Discounting, Social Security

JEL Classification: D14, D15, D91, H55, J18, J22, J26.

Suggested Citation

Merkle, Christoph and Schreiber, Philipp and Weber, Martin, Inconsistent Retirement Timing (December 20, 2017). Available at SSRN: or

Christoph Merkle (Contact Author)

Aarhus University ( email )

Nordre Ringgade 1
DK-8000 Aarhus C, 8000


Philipp Schreiber

University of Mannheim - Finance Department ( email )

L 9, 1-2
Mannheim, 68131
+49 621 181 1525 (Phone)
+49 621 181 1534 (Fax)

Martin Weber

University of Mannheim - Department of Banking and Finance ( email )

D-68131 Mannheim
+49 621 181 1532 (Phone)
+49 621 181 1534 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics