Addressing China’s retirement Dilemma: Exploring strategies to balance life expectancy and leisure preference

Abstract

We construct an overlapping generation model (OLG) that reflects workers’ endogenous retirement intention and retirement age, and examine the effects of increased life expectancy and leisure preference on individuals’ retirement age choice, with a specific focus on China’s unique demographic and economic context. The deepening degree of population aging in China may lead to a series of economic and social challenges if not properly addressed. Our findings suggest that as life expectancy rises, individuals may choose to work longer and retire later to accumulate more resources for their extended retirement years. However, with fewer young people entering the workforce and an increasing older population, labor shortages and pressures on the pension and healthcare systems are of paramount concern. The results have significant implications for policy-making in China, emphasizing the need for strategic adjustments to retirement age policies and leisure preferences to sustain economic growth and manage the aging population crisis.