Both data and people's self-reports reveal that there is an undersaving problem. Behavioral economics seeks to explain this phenomenon with the concept of hyperbolic discounting. In essence, short-term actions are inconsistent with long-term goals. This is applied to the German pension system in...

How can regulation in an era of personal responsibility aid people to make the optimal decisions about their future risks, savings, and retirement? This study aims to deepen our understanding of how different age groups process choices in relation to future risk and retirement planning in...

Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. We show...

• This paper reviews both published and emerging research on different risks retirees face and possible solutions financial planners can use to help clients overcome behavioral hurdles.• Risk assessment questions that measure loss aversion, as well as reducing myopic behavior, can help keep...

This study examined how Australia's tax and transfer system, especially in relation to the Age Pension, impacts on household retirement choices. As the population ages, fiscal challenges created when many individuals retire from working and paying tax to drawing government funded benefits and...

This paper exploits an administrative regulation in Singapore that allows individuals to withdraw between 10 to 30 percent of their pension savings at age 55. We find a large and highly significant increase in individuals' bank account balances within the first month of turning 55, which...

In this study, we quantify the macroeconomic and welfare effects of alternative fiscal consolidation plans in the context of a small open economy. Using a computable overlapping generations model tailored to the Australian economy, we examine immediate and gradual eliminations of the existing...

It is well established that consumption is “hump” shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with the standard lifecycle model with...

To assess the life-cycle welfare effects of pension reforms, we provide a dynamic stochastic model of saving, portfolio choice and retirement with a pension system that operates according to the notional defined contribution principle.Relying on the exogenous variation from a sequence of Italian...

Private pension provision faces the challenging task of providing stable income streams during retirement. The challenge has increased markedly in the last decades due to volatile financial markets, falling interest rates and the withdrawal of employers and external insurers as risk bearers of...