Consumption Patterns around the Time of Retirement: Evidence from the Consumer Expenditure Surveys

Aydogan Ulker

No 54, Econometric Society 2004 Australasian Meetings from Econometric Society

Abstract: This study,using the Consumer Expenditure Surveys from 1984 through 1998, revisits the widely pronounced retirement-savings puzzle, which claims the existence of a sharp drop in consumption at the time of retirement. In contrast to previous work, I find that consumption of the retired households is consistent with the smoothing behavior implied by the conventional permanent income/life-cycle models. The results present evidence that the elderly actually do not reduce their standard of living around the time of retirement due to a shortage in savings or some other reasons. While the evidence does not favor a dramatic drop in consumption, the composition of consumption changes significantly as households move into the retirement period. The difference between the results of this study and those of the previous work is mainly driven by the fact that I use a comprehensive measure of consumption that includes not only nondurables and services but also service flows from housing and durables. Moreover, using detailed information on the prices faced by the households yields a more accurate measure of household consumption

Keywords: Consumption; Well-being of the Elderly; Retirement (search for similar items in EconPapers)
JEL-codes: D12 I31 J14 J26 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-bec and nep-dge
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