TY  - JOUR
AU  - Hurd,Michael
AU  - Rohwedder,Susann
TI  - The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9586
PY  - 2003
Y2  - March 2003
UR  - http://www.nber.org/papers/w9586
L1  - http://www.nber.org/papers/w9586.pdf
N1  - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org

Susann Rohwedder
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407
Tel: 310-393 0411,ext. 7885
Fax: 310-451-6923
E-Mail: Susann_Rohwedder@rand.org
AB  - The simple one-good model of life-cycle consumption requires consumption smoothing.' However, British and U.S. households apparently reduce consumption at retirement and the reduction cannot be explained by the life-cycle model. An interpretation is that retirees are surprised by the inadequacy of resources. This interpretation challenges the life-cycle model where consumers are forward looking. However, data on anticipated consumption changes at retirement and on realized consumption changes following retirement show that the reductions are fully anticipated. Apparently the decline is due to the cessation of work-related expenses and the substitution of home production for market-purchased goods and services.
ER  -