We would like to acknowledge financial support for this research from the National Institutes of Health (grant P30 AG024409 08), the Program on the Global Demography of Aging, Harvard University, and ESRC grant number ES/G007438/1, Centre of Excellence in Public Health, Northern Ireland.
Optimal Retirement with Increasing Longevity†
Article first published online: 10 MAR 2014
© The editors of The Scandinavian Journal of Economics 2014.
The Scandinavian Journal of Economics
Volume 116, Issue 3, pages 838–858, July 2014
How to Cite
Bloom, D. E., Canning, D. and Moore, M. (2014), Optimal Retirement with Increasing Longevity. The Scandinavian Journal of Economics, 116: 838–858. doi: 10.1111/sjoe.12060
- Issue published online: 13 JUN 2014
- Article first published online: 10 MAR 2014
- Manuscript Accepted: MAR 2013
- Manuscript Received: AUG 2011
- National Institutes of Health. Grant Number: P30 AG024409 08
- ESRC. Grant Number: ES/G007438/1
We develop an optimizing life-cycle model of retirement with perfect capital markets. We show that longer healthy life expectancy usually leads to later retirement, but with an elasticity less than unity. We calibrate our model using data from the US and find that, over the last century, the effect of rising incomes, which promote early retirement, has dominated the effect of rising lifespans. Our model predicts continuing declines in the optimal retirement age, despite rising life expectancy, provided the rate of real wage growth remains as high as in the last century.