Stormy Futures? The Impact of Climatic Shocks on Retirement Savings

Kucuk, Merve and Ulubasoglu, Mehmet and Vu, Ha (2024): Stormy Futures? The Impact of Climatic Shocks on Retirement Savings.

Abstract

Climatic shocks introduce additional complexities to individuals’ lives and influence their critical decisions, both present and into the future. We utilise longitudinal administrative data on Australian individual retirement contributions to present the first estimated effects of natural disasters on retirement savings. Using the 2010-2011 Queensland floods as a natural experiment, we document that retirement contributions increase following the disaster. We show that individuals update their risk perceptions post-disaster, which drive changes in their portfolio choices across retirement savings, investment property ownership, and other interest-generating financial instruments. Our findings offer important insights into the relationship between individuals' planning horizons, retirement savings and their adaptive strategies in maintaining retirement welfare amidst demographic changes and increased environmental risks.

• Item Type: MPRA Paper
• Language: English
• Keywords: climate change, retirement savings, risk perceptions
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Household Saving; Personal Finance; D - Microeconomics > D9 - Intertemporal Choice; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

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