Transition to retirement and beyond: Studies in retirement behaviour in Australia

摘要

The ageing of the population is a global phenomenon which poses a unique set ofchallenges for policymakers regarding health and age care, labour market dynamics ofolder workers and devising systems of social protection. The design of the Australianretirement income system based on a public Age Pension supplemented by mandatoryand voluntary retirement savings places emphasis on individual decision-making andaccountability by individuals to deliver adequate retirement incomes.The focus of this thesis is to understand the investment and consumption decisions madeby Australians who are transitioning to, and in the early years of, retirement. That is,specifically people aged 45 years and over. We start by developing and solving a simplelife-cycle optimisation problem for individuals 45 years and over incorporating featuresof the Australian retirement income system to motivate our empirical research questionsand inform our research findings. We find optimal consumption paths to be smooththroughout the individual’s lifetime while the optimal portfolio weight for risky asset ishigher for working life than for retirement.We then investigate investment and consumption behaviour of the pre and actual retireesusing the Household Income Labour Dynamics of Australia panel dataset for the period2001 to 2011. We find some evidence of a fall in the proportion of risky assets held forretired single and couple Australian households using a pooled ordinary least squaresmodel, a fixed effects model and a random effects model. We also find a drop inconsumption at retirement for older Australian households. However, after employinginstrumental variables estimation with subjective retirement expectations as aninstrument we find the fall is mainly due to unplanned retirement. There is also a possibledelayed effect as the impact of retirement on consumption maybe felt beyond the firstyear of retirement.Overall, older Australian households are behaving fairly consistently with the life-cycleportfolio theory of consumption and portfolio choice – they hold less risky assets inretirement and have smooth consumption unless faced with external shock leading tounplanned retirement.