The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement
Year: 2003
Type: preprint
Study design: Observational Study
Abstract: The simple one-good model of life-cycle consumption requires "consumption smoothing."However, British and U.S. households apparently reduce consumption at retirement and the reduction cannot be explained by the life-cycle model.An interpretation is that retirees are surprised by the inadequacy of resources.This interpretation challenges the life-cycle model where consumers are forward looking.However, data on anticipated consumption changes at retirement and on realized consumption changes following retirement show that the reductions are fully anticipated.Apparently the decline is due to the cessation of work-related expenses and the substitution of home production for market-purchased goods and services.
Authors: Michael D. Hurd, Susann Rohwedder
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3151012974