Patterns of Consumption and Savings around Retirement

This chapter reviews the economic literature looking at how consumption, savings, and other
positions on household balance sheets change around retirement. Four patterns stand out. First,
many households have barely any savings and hold substantial amounts of consumer debt at the
time of retirement. Second, consumption falls at retirement, possibly due to work-related expenses
or because households face unexpected adverse shocks. Third, liquid savings increase at
retirement. Fourth, wealth increases more over the course of retirement for the average household.
We discuss why and how analyzing these patterns helps us to answer the ultimate question of
whether or not households save enough for retirement.