(UBS Pensions Series 033) Can the retirement-consumption puzzle be resolved? Evidence from the British Household Panel Survey

Sarah Smith

FMG Discussion Papers from Financial Markets Group

Abstract: This paper uses data from the British Household Panel Survey to shed further light on the fall in spending at retirement (the “retirement-consumption puzzle”). Comparing food spending for men retiring involuntarily early (through ill health or redundancy) with spending for those who retire voluntarily, it finds a significant fall in spending only for those who retire involuntarily. This is consistent with the observed fall in spending being linked to a negative wealth shock for some retirees. Evidence on psychological and financial well-being also indicates that the retirement experience of involuntary retirees is very different to that of voluntary retirees.

Date: 2005-01
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Persistent link: https://EconPapers.repec.org/RePEc:fmg:fmgdps:dp528

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