Do Retirees Want Constant, Increasing, or Decreasing Consumption?

Anqi Chen and Alicia H. Munnell

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

Abstract: Whether households prefer a constant, increasing, or decreasing path of consumption in retirement has important implications for our understanding of retirement adequacy. Financial planners and researchers have often assumed that retirees would like to maintain their pre-retirement standard of living. However, several studies suggest that retired households decrease their consumption over time. This project builds on the existing literature by: 1) examining retirement consumption over longer periods; 2) using wealth to separate constrained and unconstrained households in order to analyze whether declines in consumption are driven by necessity or preferences; and 3) exploring whether, within unconstrained households, those with steeper mortality profiles are more likely to front-load consumption.

Pages: 37 pages
Date: 2021-11
New Economics Papers: this item is included in nep-age and nep-ene
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