Traditionally, households have been seen as acting as a single unit when it comes to savings. Although this might be correct for some parts of household savings, we question the correctness of the unitary model with respect to non-mandatory retirement savings. To answer this question we analyze...

We document the pattern by which Canadians de-accumulate financial wealth during retirement – and find it rather puzzling. While the Modigliani lifecycle model can justify a variety of de-accumulation or draw down rates depending on risk preferences, the existence of asymmetric taxes imply...

The Australian Government uses the means-test as a way of managing the pension budget. Changes in Age Pension policy impose difficulties in retirement modelling due to policy risk, but any major changes tend to be ‘grandfathered' meaning that current retirees are exempt from the new changes....

This study examines household portfolio choice through the retirement transition. I show that couples significantly decrease their stock allocations after retirement, whereas singles' allocations remain relatively unchanged. Reallocations are concentrated among couples in which the wife is more...

Fudenberg's (2006) model of bounded rationality posits that greater complexity should result in households being less likely to achieve rational outcomes. Some households have higher complexity in retirement planning because expected retirement income varies during retirement. Based on 1995 to...

We examine incomplete annuity menus, background risk, bequest motives, and default risk as possible drivers of divergence from full annuitization. Contrary to what is often suggested in the literature, we find that full annuitization remains optimal if saving is possible after retirement. This...

We evaluate retirement savings adequacy using a large panel of U.S. workers with a 401(k) account. We model medical expenditures, longevity, investment risk, and the likelihood of withdrawals due to hardship, job separation, and reaching age 59 1/2. Based on their current account balances,...

We develop and simulate a stochastic lifecycle model to investigate optimal annuity purchases at retirement. Retirees can invest in risky assets, purchase fairly priced immediate or deferred lifetime annuities, and are eligible for a targeted safety net pension. We match baseline parameters to...

This article introduces four metrics quantifying the adequacy of retirement savings taking into account all major sources of retirement income. The metrics are applied to a representative sample of the Australian population aged 40 and above. Employers in Australia currently make compulsory...

We study the decision problem of the optimal choice between home equity release products from a retired homeowner's perspective in the presence of longevity, long-term care, house price, and interest rate risk. The individual can choose to release home equity using reverse mortgages or home...