This paper considers an individual's problem and effects on savings for retirement. We show using a deterministic model, a linear utility function and assuming an individual can benefit from a tax break in savings, that under reasonable circumstances, there is only one switch from not saving to starting to save. Further, we draw some implications for the effects of income inequalities expressed by individuals tax brackets on inequality after retirement. Due to the model's simplicity, further research is required which will consider the uncertain effects of income and the future on current savings decisions.
ASJC Scopus subject areas
- Management Science and Operations Research