TY  - JOUR
AU  - Bloom,David E.
AU  - Canning,David
AU  - Moore,Michael
TI  - The Effect of Improvements in Health and Longevity on Optimal Retirement and Saving
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10919
PY  - 2004
Y2  - November 2004
UR  - http://www.nber.org/papers/w10919
L1  - http://www.nber.org/papers/w10919.pdf
N1  - Author contact info:
David E. Bloom
Harvard School of Public Health
Department of Global Health and Population
665 Huntington Ave.
Boston, MA 02115
Tel: 617/432-0866
Fax: 617/432-6733
E-Mail: dbloom@hsph.harvard.edu

David Canning
Harvard School of Public Health
Department of Global Health and Population
665 Huntington Ave.
Boston, MA 02115
Tel: 617/432-6336
Fax: 617/566-0365
E-Mail: dcanning@hsph.harvard.edu

Michael Moore
Queens University, Belfast
E-Mail: m.moore@qub.ac.uk
AB  - We develop a life-cycle model of optimal retirement and savings behavior under complete markets where retirement is caused by worsening health in old age. Our model explains the long-run decline in the age of retirement as an income level effect. We show that improvements in health and longevity tend to increase the desired retirement age, though less than proportionately, while, contrary to conventional views, reducing savings rates. The retirement age is not simply proportional to healthy life span because compound interest creates a wealth effect when lifespan increases, leading to more leisure (early retirement) and higher consumption (lower savings).
ER  -