Population Aging and Legal Retirement Age∗

This paper analyzes the effects of population aging on the preferred legal retirement age. What is revealed is the crucial role that the indi-rect ’macro ’ effects resulting from a change in the legal retirement age play in the optimal decision. Two Social Security systems are stud-ied. Under a defined contribution scheme aging lowers the preferred ∗All correspondence to Francisco Lagos. The authors thank Ignacio Ortuño, Slomo We-ber, Francisco Marhuenda, Georges Casamatta, and two anonymous referees for comments on a previous version of this paper