Patterns of Consumption and Savings around Retirement
By Arna Olafsson & Michaela Pagel
This chapter analyzes 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, bargain shopping, 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 households save enough for retirement.
Source SSRN
