Retirement decisions

Purpose: Research focus on retirement behaviour to improve understanding of efficient resource allocation. Originality: The first age profile fitted utility function allows elasticity, risk aversion and disutility estimation on Australian on retirement wealth and income. Key literature / theoretical perspective: • Kingston, G.H., Efficient Timing of Retirement. Review of Economic Dynamics, 2000. • Farhi, E. and S. Panageas, Saving and investing for early retirement: A theoretical analysis. Journal of Financial Economics, 2007. • Chetty, R., A New Method of Estimating Risk Aversion. National Bureau of Economic Research Working Paper Series. Design/methodology/approach: In a mix of PAYG and fully funded pension system, Efficient retirement timing is when the target retirement wealth is achieved by joint determination of optimal consumption path and portfolio choice. Solving the optimal control problem in on a continuous retirement timing model with HILDA data. Findings: A relatively low elasticises ,a pooled high risk aversion and the age-dependent convexity level of disutility. Research limitations/implications: Though I have exploited the heterogeneity of retirement behaviour in a Panel Pobit Model but less improvement in the data fitting model for an elasticity estimation. It is limited in the theoretical explanation and the result is subjective to less variation in pension benefits before 2007 SG reform. Practical and Social implications: A relatively low elasticises implies less responsiveness to pension rate and less willingness of risk taking investment; a high pooled relative risk aversion indicates a strong motive of consumption smoothing. The findings cast doubt on Australian pension system induces earlier retirement.