In the first decision task you make a sequence of consumption and savings decisions over the “retirement phase” of a lifecycle. This sequence consists of 40 "periods", corresponding to each year of a retirement lifetime from age 62 to age 101. Whether you continue to "survive" and make decisions from one period to the next depends on a pre-drawn random whole number between 1 and 100 (both inclusive), where each of the 100 numbers had an equal chance of being drawn. If the random number is strictly greater than the period specific survival cutoff, then you “die” and your earnings for the sequence are determined by your current, cumulative earnings over the lifecycle up to the period in the retirement phase when you die. Any remaining savings balances that you have as of that period will become worthless.

The survival cutoffs are displayed in the Table below. For instance, the cutoff for period 1 (age 62) is 96. This means that, if the random number drawn for period 1 is 97, 98, 99, or 100, then the sequence is over and your earnings for the sequence are determined by the amount of consumption you chose for the period 1 only. All future decisions do not affect your payment for the current sequence. If the random number drawn for period 1 (age 62) is between 1 and 96 (both inclusive), then you “survive” to the second period and your savings from period 1 carry over to that next period. Similarly, a cutoff of 92 for period 20 means that, conditional on living to period 20, if the random number for period 20 is either 93, 94, 95, 96, 97, 98, 99, or 100, then period 20 is the last period that you would accumulate payments for consumption choices in the sequence and all future decisions do not affect your payment for the sequence. The results of all draws will be revealed to you only at the end of the sequence. This means that you will not know whether the sequence has ended until after you have completed all 40 periods of the sequence.

Period	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20
Corresponding age	62	63	64	65	66	67	68	69	70	71	72	73	74	75	76	77	78	79	80	81
Cutoff	96	96	96	96	96	96	96	96	96	95	95	95	95	94	94	94	93	93	93	92
Expected periods remaining	16.09	15.72	15.33	14.93	14.51	14.07	13.62	13.14	12.65	12.13	11.72	11.28	10.83	10.34	9.94	9.51	9.05	8.66	8.24	7.78

Period	21	22	23	24	25	26	27	28	29	30	31	32	33	34	35	36	37	38	39	40
Corresponding age	82	83	84	85	86	87	88	89	90	91	92	93	94	95	96	97	98	99	100	101
Cutoff	91	91	90	89	88	87	86	85	83	82	80	79	77	75	73	71	70	68	67	0
Expected periods remaining	7.37	7.00	6.59	6.22	5.86	5.52	5.20	4.88	4.57	4.30	4.02	3.78	3.52	3.27	3.02	2.77	2.49	2.14	1.67	1.00

Note: that the “Expected periods remaining” is based on the cutoff numbers and includes the current period, which has a survival probability of 1. The displayed cutoff numbers reflect both real life mortality risk and intertemporal discounting of amounts received in the future.

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You enter the first period of retirement with an initial, lump-sum, one-time savings endowment of 145,350 “points”. You can think of this as the amount that you saved during your working years for your retirement. You are also entitled to Social Security benefits paid per period, also in points. Social security benefits are composed of two amounts: 1) an annuity amount that increases with your claiming age, and 2) a one-time lump-sum amount that also increases with claiming age and that is paid out only in the year/period of claiming benefits. As shown in the table below, the amount of Social Security benefits and lump-sum benefits you receive each period depends on when you start claiming those Social Security benefits, between ages 62-70 or periods 1-9. You receive zero Social Security benefits before claiming, and after claiming benefits you receive the one-time lump-sum payment and the same per period (annual) benefit for all remaining periods of the sequence (conditional on “survival”). The benefit formula is designed so that on average, the Social Security system will neither lose nor make money regardless of when you start to claim benefits. In addition to deciding when to claim Social Security benefits, your other main task in each period is to choose how much of your available points to convert into current period consumption or “money”; the remaining point balance is automatically saved for consumption use in future periods.

Claiming age	Claiming period	Annual Benefit after claiming	Lump Sum in claiming period	Total in claiming period
62	1	14887	0	14887
63	2	15376	7725	23101
64	3	15913	15744	31657
65	4	16502	24112	40614
66	5	17153	32812	49965
67	6	17873	41912	59785
68	7	18672	51449	70121
69	8	19564	61457	81021
70	9	20563	71999	92562

The following table presents the above information in an alternative manner. Your per-period Social security benefit depends on when you claim it.
After you claim it, you will get the same SSB amount in every subsequent period. Your SSB benefit in all periods until you claim it is 0 as depicted by the blanks in the table.

Claiming period -		1	2	3	4	5	6	7	8	9
SSB benefit at age	SSB benefit in period	Per period social security benefit
62	1	14887
63	2	14887	23101
64	3	14887	15376	31657
65	4	14887	15376	15913	40614
66	5	14887	15376	15913	16502	49965
67	6	14887	15376	15913	16502	17153	59785
68	7	14887	15376	15913	16502	17153	17873	70121
69	8	14887	15376	15913	16502	17153	17873	18672	81021
70	9	14887	15376	15913	16502	17153	17873	18672	19564	92562
71+	10+	14887	15376	15913	16502	17153	17873	18672	19564	20563

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Your earnings for each period depend on your consumption choice, which is the number of points you choose to convert into money for that period. What you don't consume is saved, and your savings can matter for the number of points that you can convert into money (or consume) in future periods.
As shown in the table below, your savings earn 2.7% interest each period, paid out in additional points.

Ending period savings for current period	Interest Earned between periods	Beginning period savings for next period
0	0	0
5,000	135	5,135
10,000	270	10,270
15,000	405	15,405
20,000	540	20,540
25,000	675	25,675
30,000	810	30,810
35,000	945	35,945
40,000	1080	41,080
45,000	1215	46,215
50,000	1350	51,350
55,000	1485	56,485
60,000	1620	61,620
65,000	1755	66,755
70,000	1890	71,890
75,000	2025	77,025
80,000	2160	82,160
85,000	2295	87,295
90,000	2430	92,430
95,000	2565	97,565
100,000	2700	102,700
200,000	5400	205,400
400,000	10800	410,800
800,000	21600	821,600
1,600,000	43200	1,643,200

Beginning balance = Ending balance of last period × 1.027

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You will be given tables and figures showing the relationship between consumption choices in each period and money earned, and the slider used to make choices on your decision screen also calculates your period earnings from your consumption choice.
The precise formula is as follows:

Note the following:

1. The greater the consumption you choose, the greater are your earnings for that period, but the less income/points you will have for future periods.
2. The money you earn from consumption is proportionally diminishing; the difference in your earnings from consuming 25,000 rather than 20,000 points is larger than the difference from consuming 30,000 rather than 25,000 points, and so on.
3. To avoid negative payoffs, you will never be able to consume less than 14887 points in any period. You can think of this as the minimum consumption expenditure you need in order to live. Your choices will be restricted so that you can never consume less than 14887 points.

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For periods 1 to 8, you will be asked whether you want to claim Social Security Benefits if you have not yet done so. You will be forced to claim benefits in the current period, if your available points are not sufficient to cover the minimum of consumption of 14887 or if you enter into period 9 (age 70), the period when annual benefits will stop growing with further claiming delays. In addition, each period you are asked to submit how much you want to consume. The remaining amount will be saved.
Once you move the slider to a particular consumption choice, the computer will calculate for you your current period earnings from consumption and your end of period savings using the following formula:

If you have claimed Social Security benefits:
Savings at the end of current period = Savings at the beginning of the current period + Total Social Security payments - consumption

If you have not yet claimed Social Security benefits:
Savings at the end of current period = Savings at the beginning of the current period - consumption

Given the method for determining savings at the end of the current period, your savings for the beginning of the next period is determined by the formula:
Savings at the beginning of the next period = Savings at the end of the current period * (1.027)

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Following the first period of a sequence, and in every period thereafter, you will be reminded of your social security benefit amount (the amount is 0 if you have not yet claimed benefits), your beginning period savings, your consumption amount, your end of period savings, the money (consumption) earned for the period, and your cumulative money earned for the sequence.

Recall that whether you continue to "survive" from one period to the next depends on a pre-drawn random whole number between 1 and 100 (both inclusive), where each of the 100 numbers had an equal chance of being drawn. You will be informed about the termination period in the 40-period sequence only after all 40 periods have been played. The listed cumulative money earned on the information screen, is assuming that the random draw is always at or below the period threshold. If the random draw is above the period threshold, then all periods after that draw will be excluded from your final payment for the sequence.

After this first task is completed, you will receive instructions for the second task. Your earnings from the first or second task determine how much additional money you earn in the experiment (above your $10.00 participation payment). You can never earn less than $0 from the first or the second task of the experiment.

There is a quiz on the next page based on the given instructions. There will be no 'Back button', so please make sure that you understand the instructions so far.
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