The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Michael Hurd
Reference work entry


This article uses a simple life-cycle economic model of retirement to characterize the optimal retirement age and the effects of the wage rate, wealth, and the time horizon on that age. The model is then extended to include pensions, both public and private, which can produce non-convexities in the lifetime budget constraint. The model is further extended to include health effects on retirement, uncertainty and joint retirement (the coordination of retirement dates by husband and wife). The chapter concludes with a discussion of retirement in the context of behavioural economics.


Age discrimination Annuities Bequest motive Collective models of household Dynamic programming Health care expenditure Health insurance Labour supply Leisure Life expectancy Pensions Precautionary savings Probability distributions Retirement Retirement hazard Risk aversion Social Security in the United States Subjective probability Uncertainty 

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Financial support from the National Institute on Ageing is gratefully acknowledged. Many thanks to Susann Rohwedder for her valuable advice and suggestions.


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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Michael Hurd
    • 1
  1. 1.