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Can the retirement-consumption puzzle be resolved?: evidence from the British Household Panel Survey

Author

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  • Smith, Sarah

Abstract

This paper uses data from the British Household Panel Survey to shed further light on the fall in spending at retirement (the “retirement-consumption puzzle”). Comparing food spending for men retiring involuntarily early (through ill health or redundancy) with spending for those who retire voluntarily, it finds a significant fall in spending only for those who retire involuntarily. This is consistent with the observed fall in spending being linked to a negative wealth shock for some retirees. Evidence on psychological and financial well-being also indicates that the retirement experience of involuntary retirees is very different to that of voluntary retirees.

Suggested Citation

  • Smith, Sarah, 2005. "Can the retirement-consumption puzzle be resolved?: evidence from the British Household Panel Survey," LSE Research Online Documents on Economics 24642, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:24642
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    File URL: http://eprints.lse.ac.uk/24642/
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    More about this item

    Keywords

    retirement; life-cycle model of consumption; well-being;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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