Is There a Retirement-Savings Puzzle?

James Banks, Richard Blundell () and Sarah Tanner

American Economic Review, 1998, vol. 88, issue 4, 769-88

Abstract: This paper addresses whether households save enough for their retirement. For successive date-of-birth cohorts the authors analyze income and expenditure patterns around the time of retirement. They find a fall in consumption as household heads retire which cannot be fully explained by a forward-looking consumption-smoothing model that accounts for expected demographic changes and mortality risk. Controlling for labor-market participation explains part, but not all, of this dip. The authors argue that the only way to reconcile fully the fall in consumption with the life-cycle hypothesis is with the systematic arrival of unexpected adverse information. Copyright 1998 by American Economic Association.

Date: 1998
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Working Paper: Is there a retirement-savings puzzle? (1995)
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