ReprintThis article was originally published by Wiley for the American Finance Association (Merton RC, Scholes MS. 1995. Fischer Black. J. Finance 50(5):1359–70). It is reprinted with permission from John Wiley and Sons © 1995. Reference formatting was updated to facilitate linking.

This article reviews recent scientific literature on consumer financial decisions over the life cycle, outlining its implications for the design of pension plans. It begins with a review of advances in the theory of rational financial planning and wealth management. It then summarizes the recent...