The Composition Effect of Consumption around Retirement: Evidence from Singapore
18 Pages Posted: 1 Nov 2014
Date Written: November 1, 2014
It is well established that consumption is “hump” shaped over an individual’s lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with the standard lifecycle model with consumption smoothing. Using a unique dataset with detailed administrative records of credit and debit card transactions, we show the hump shaped lifecycle consumption pattern as documented in the literature. Additionally, we show compositional changes in consumption expenditures across individuals in the years surrounding retirement confirming the results of Aguiar and Hurst (2005, 2013).
Keywords: Life Cycle, Aging, Pension Savings, Consumption, Spending, Debt, Credit Cards, Household Finance, Banks, Loans, Durable Goods, Discretionary Spending, Liquidity Constraints, Credit Constraints
JEL Classification: D12, D14, D91, E21, E51, E62, G21, H31, J26
Suggested Citation: Suggested Citation