Planning for Retirement: The Accuracy of Expected Retirement Dates and the Role of Health Shocks

This paper illustrates the effect that unexpected health changes could have on a person s retirement decision and future. It is believed by the researchers that retirement age is something that a person decides over the course of their life by thinking of many factors that could influence their welfare in retirement. An economic model is designed in order to understand possible effects of different factors and health shocks on retirement age. Various policies and retirement plans are examined along with in-depth econometric and strategic models. Health prevailed as a key predictor in ones retirement decision. The occurrence of a shock in ones health normally forces the worker to retire sooner than had been anticipated. Net worth, social security, and pension plans are all important in making the initial retirement plan, but have little effect on the outcomes based on the plan.