Milestone Birthdays and Retirement Investment Behaviour
33 Pages Posted: 18 Aug 2017
Date Written: August 17, 2017
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
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