Abstract
In this article, we use dynamic leisure preference to study the optimal retirement decision with consideration of part-time work after the “official” retirement. We also consider a risky investment besides risk-free investment. and allow investor borrowing money at risk-free interest rate. Our results indicate that the optimal retirement age is very sensitive to the following parameters: coefficient of risk version, the leisure, rate after retirement, coefficient of survival function (describing the individual’s mortality), interest rate and discount rate, and is especially sensitive to the drift of return rate of risky assets invested. Our results also show that mortality improvement greatly affect all other optimal solutions except optimal retirement age, but have small affect on optimal retirement age.
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