Group for Research in Decision Analysis

The endogenous determination of retirement age and Social Security benefits

Francisco Cabo Universidad de Valladolid, Spain

Because of aging population, public pension systems show deficits which boost public debt. This can be counteracted by reducing the generosity of pension, determined by the government; or delaying the retirement age, which we allow individuals to decide. An atomistic decision-maker would retire as soon as possible. Conversely, if non myopic, he would postpone retirement alleviating the pressure on the public debt. This paper defines the incentive strategies which induces myopic agents to act non-myopically.