Post-Retirement Savings and Reduction of Consumer Debt

Using comprehensive transaction-level panel data on personal finances, we document
that individuals repay their consumer debt and save more after they retire. These findings
are puzzling because standard economic theory predicts that people should save before,
rather than after, the expected drop in income upon retirement. We consider a number of
potential explanations for our findings, including a drop in work-related expenses and an
increase in medical health risks around retirement, which are the leading explanations of
the so-called retirement-consumption and retirement-savings puzzles. Our findings suggest
these explanations are not empirically relevant and thereby inform the larger question of
whether individuals save enough for retirement. Additionally, we rationalize our findings
in a model with non-standard preferences