Milestone Birthdays and Retirement Investment Behaviour

33 Pages Posted: 18 Aug 2017

See all articles by Paul Gerrans

Paul Gerrans

The University of Western Australia - UWA Business School

David Pitt

Financial Research Network (FIRN); Macquarie University, Macquarie Business School

Sirimon Treepongkaruna

The University of Western Australia; Financial Research Network (FIRN)

Date Written: August 17, 2017

Abstract

This paper investigates individuals’ investment behaviour in their retirement savings surrounding milestone birthday ages. Age is expected to play a key role in influencing investment choices, primarily through the risk of the investment strategy reflected in the asset allocation. Less clear is what particular age this occurs at or whether it is a smooth, incremental adjustment. We investigate whether milestone ages, that is those ending in “0” or “5”, play a role in the propensity to make investment changes. We utilise a large Australia retirement savings fund which provides the history of investment changes of a diverse sample of workers. We do find a clear role for age in the propensity to make investment changes. Pervasive milestone effects are not observed but we do observe some ages suggestive of milestone effects which are otherwise inconsistent with the expected age relationship. We also find a difference between genders surrounding the milestone at age 50.

Keywords: Milestone age, life-cycle, retirement savings, consumer finance, household finance, birthdays

JEL Classification: J26, D91, G11, D14, G23, E21

Suggested Citation

Gerrans, Paul and Pitt, David and Treepongkaruna, Sirimon, Milestone Birthdays and Retirement Investment Behaviour (August 17, 2017). Available at SSRN: https://ssrn.com/abstract=3020958 or http://dx.doi.org/10.2139/ssrn.3020958

Paul Gerrans (Contact Author)

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia
61 8 64882910 (Phone)

David Pitt

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Sirimon Treepongkaruna

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
+61864887853 (Phone)
+61864881086 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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