On retirement time decision making

Optimal timing of retirement is an important part of retirement planning. We consider three types of individuals distinguished by the way they use information when deciding the retirement time. For each of these types, we analyze two elements influencing the decision, the market model and the mortality model, and we study the impact of working with one combination or another. Based on analytical solutions to almost all {the} combinations, we reach a conclusion, even relevant for practical advice: Young individuals must prioritize the market model over the mortality model while for older individuals, it is the other way around.

Keywords: optimal retirement time, decision making, mortality, optimal consumption, investment

JEL Classification: D91, D81, C61, G11, J26

Suggested Citation: Suggested Citation

Chen, An and Hentschel, Felix and Steffensen, Mogens, On retirement time decision making (October 2, 2020). Available at SSRN: https://ssrn.com/abstract=2894855 or http://dx.doi.org/10.2139/ssrn.2894855