Retirement and Consumption in a Life Cycle Model

TitleRetirement and Consumption in a Life Cycle Model
Publication TypeJournal Article
Year of Publication2008
AuthorsBlau, DM
JournalJournal of Labor Economics
Volume26
Issue1
Pagination35
Call Numbernewpubs20080229_522066.pdf
KeywordsConsumption and Savings, Event History/Life Cycle, Retirement Planning and Satisfaction
Abstract

Consumption expenditure declines sharply at the time of retirement for many households, but the majority maintain a smooth consumption path. A simple life cycle model with uncertainty about the time of retirement can account for this pattern. A richer version of the model is calibrated to data from the Health and Retirement Study (HRS). The median change in consumption expenditure at retirement generated by the model is zero, while the mean is negative, matching the HRS data. However, the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data.

Endnote Keywords

Retirement/Consumption/Life Cycle Models

Endnote ID

13082

Citation Key7193