Optimal retirement savings over the life cycle: a deterministic analysis in closed form (Q6072265)

The paper focuses on the life cycle consumption-savings problem within a scenario where a risk-free investment opportunity, a tax-deferred retirement account, and deterministic labor income are included. At first, the study deals with an unrestricted version of the consumption-savings problem in which individuals can borrow against future labor income. This version is then extended by the introduction of a non-negativity constraint on wealth, so achieving optimal consumption-savings decisions. Moreover, the paper considers a consumption-savings model that offers additional opportunities to save in a tax-deferred retirement account. So, the savings decision constitutes an asset location decision. Finally, some generalizations are presented.