- Title: Mr
- Position: PhD Student - Department of Economics
- Load: PhD Student Full Time
- Principal supervisor: Professor Geoffrey Kingston
- Associate supervisor: Professor Stefan Trueck
- Date of submission: 03/03/2014
- Thesis title: Retirement Financial Planning
- Purpose: Develop and calibrate a utility model with realistic assumptions to model the financial behaviours of Australian retirees
- Originality: A semi-analytical solution allows the utility parameters to be effectively calibrated to ABS data. While previous researches require assumptions on many model parameters.
- Key Literature/theoretical perspective:
- Suitable form of utility function and dynamic programming methods.
- Empirical studies in Australian and overseas on retiree’s preferences on consumption, housing and bequest.
- Design/methodology/approach: With data analysis and literature review, develop an utility model that is theoretically sound and mathematically feasible -> calibrate the model to ABS data -> review the model -> repeat
- Findings: The calibrated model reasonably explains the financial behaviour of the households surveyed in the ABS data.
- Research limitations/implications: This research attempts to model the financial behaviour of Australians in average. However the assumption that a single utility function with a particular set of parameters is applicable for everyone, suffers from the lack of variability.
- Practical and social implications:
- Knowing the financial preference of Australian retirees helps with financial planning in practice.
- We can model people’s reaction to a certain change in public policy, if we assume the change in modelled behaviour will be similar to the change in their actual behaviour.
- Keywords: Utility, financial planning, dynamic programming, age pension