Munich Personal RePEc Archive

Mean survival times and retirement ages

Linden, Mikael and Väänänen, Niko (2023): Mean survival times and retirement ages.

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We propose an elementary economic model which assumes that the integral of life survival function can be interpreted as a utility function. The model helps us to understand connections between individual’s survival estimate to some specific age and the timing of retirement. The difference between survival and related longevity costs is maximized with an estimate of survival time. The results are derived with the concept of restricted mean survival times (RMST). This is also applied to the observed retirement and death ages for the Finnish year 1947 birth cohort. We show that actual survival times, i.e., mean lifetimes to the age of 73 years, which is the highest age in our follow-up sample, differ among retired and not yet retired persons between the ages from 60 to 68 years. The main result is that persons who retire in ages from 62 to 66 years have shorter mean lifetimes to the age of 73 years compared to individuals who do not retire in these ages. This is interpreted as evidence of too optimistic survival estimates among the persons retiring at the most popular retirement ages.

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