Inconsistent retirement timing

Merkle, Christoph ; Schreiber, Philipp ; Weber, Martin

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DOI:	https://doi.org/10.3368/jhr.0920-11215R2
URL:	https://jhr.uwpress.org/content/59/3/929
Weitere URL:	http://jhr.uwpress.org/content/early/2022/01/04/jh...
URN:	urn:nbn:de:bsz:180-madoc-675516
Dokumenttyp:	Zeitschriftenartikel
Erscheinungsjahr:	2024
Titel einer Zeitschrift oder einer Reihe:	Journal of Human Resources : JHR
Band/Volume:	59
Heft/Issue:	3
Seitenbereich:	329-974
Ort der Veröffentlichung:	Madison, Wis.
Verlag:	Univ. of Wisconsin Press
ISSN:	0022-166X , 1548-8004
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Betriebswirtschaftslehre > ABWL u. Bankbetriebslehre (Seniorprofessur) (Weber 2017-)
Bereits vorhandene Lizenz:	Creative Commons Namensnennung, nicht kommerziell, keine Bearbeitung 4.0 International (CC BY-NC-ND 4.0)
Fachgebiet:	330 Wirtschaft
Fachklassifikation:	JEL: D14 , D15 , D91 , H55 , J18 , J22 , J26,
Freie Schlagwörter (Englisch):	retirement timing , time preferences , hyperbolic discounting , social security
Abstract:	In an online experiment with more than 2,000 participants, we measure consistency of time preference and study actual and planned retirement timing decisions. Theory predicts that hyperbolic time preferences can lead to dynamically inconsistent retirement timing. We find that time inconsistent participants retire on average 1.75 years earlier than time consistent participants. Participants, who are not yet retired, decrease their planned retirement age as they grow older. This negative effect of age is about twice as strong for time inconsistent participants. The temptation of early retirement seems to rise in the final years of approaching retirement. As a consequence, time inconsistent participants have a higher probability of regretting their retirement decision. In addition, they do not compensate for the loss of social security benefits by purchasing private pension insurance. Using data from a representative household survey (German SAVE panel), we find similar results.