Can the retirement consumption puzzle be solved?
IFS Working Paper W04/07
This paper uses UK panel data to shed further light on the fall in spending at
retirement (the retirement-consumption puzzle). It compares the profiles of
spending and well-being at retirement for different groups, defined according to
whether retirement is voluntary or involuntary. Where retirement is voluntary, food
spending and individual well-being are largely smoothed through retirement; where
retirement is involuntary, both food spending and well-being fall. This is consistent
with the retirement consumption puzzle being linked to negative wealth shocks.
However, there remains one group for whom retirement appears to be voluntary, yet
whose spending falls. Fully resolving the puzzle requires a better understanding of
how the nature of retirement links to spending and of how different groups substitute
leisure for consumption.
Related Information
| DOI | 10.1920/wp.ifs.2004.0407 |
| ISSN | 1742-0415 |
| JEL classification | D91 |
| Volume, issue, pages | 28 pp |
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