Faculty Publications


Lifecycle finance: Upending the old retirement rules

Document Type


Publication Date



For economists steeped in the tradition of lifecycle finance, the important variable is the lifetime standard of living which a household is able to support. People seek to smooth spending over their lifetimes in order to obtain the greatest satisfaction from their limited resources, and the problem to be solved is how high this standard of living can be. Because salary, household composition, taxes, mortgage payments, and so forth, vary so dramatically over a household's lifecycle, trying to target basic rules of thumb related to replacement rates, wealth accumulation targets, savings rates, or withdrawal rates, can end up causing more harm than good.