The Effect of Improvements in Health and Longevity on Optimal Retirement and Saving / David E. Bloom, David Canning, Michael Moore.

Format:

Book

Author/Creator:

Bloom, David E.

Contributor:

National Bureau of Economic Research.

Canning, David.

Moore, Michael.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10919.

NBER working paper series no. w10919

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

We develop a life-cycle model of optimal retirement and savings behavior under complete markets where retirement is caused by worsening health in old age. Our model explains the long-run decline in the age of retirement as an income level effect. We show that improvements in health and longevity tend to increase the desired retirement age, though less than proportionately, while, contrary to conventional views, reducing savings rates. The retirement age is not simply proportional to healthy life span because compound interest creates a wealth effect when lifespan increases, leading to more leisure (early retirement) and higher consumption (lower savings).

Notes:

Print version record

November 2004.