Retirement Consumption: Insights from a Survey

36 Pages Posted: 24 Jan 2002 Last revised: 16 May 2021

See all articles by John Ameriks

John Ameriks

The Vanguard Group, Inc.

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

John V. Leahy

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 2002

Abstract

Prior research has established that consumption falls significantly at retirement. What is not known is the extent to which this fall is anticipated during the working years. Do working households expect such a large fall in consumption upon retirement, or are they taken by surprise? Using data from a new survey, we show that many working households do expect a considerable fall in consumption when they retire. In fact, those who are already retired report significantly smaller falls in consumption than are expected by those who are still working. We show that participation in the stock market plays a dominant role in explaining the gap between expectations and outcomes, indicating that much of the gap is a result of unexpected stock market appreciation. The survey produces new insights into the high level of uncertainty in the period leading up to retirement, and the surprises that may lie in store when households actually retire.

Suggested Citation

Ameriks, John and Caplin, Andrew and Leahy, John V., Retirement Consumption: Insights from a Survey (January 2002). NBER Working Paper No. w8735, Available at SSRN: https://ssrn.com/abstract=298259

John Ameriks

The Vanguard Group, Inc. ( email )

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Andrew Caplin (Contact Author)

New York University (NYU) - Department of Economics ( email )

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HOME PAGE: http://www.econ.nyu.edu/user/caplina/

National Bureau of Economic Research (NBER)

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John V. Leahy

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
United States
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212-995-4186 (Fax)

HOME PAGE: http://www.nyu.edu/fas/Faculty/LeahyJohn.html

National Bureau of Economic Research (NBER)

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