Dissaving after Retirement: Testing the Pure Life Cycle Hypothesis

65 Pages Posted: 11 Apr 2004 Last revised: 9 Nov 2022

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 1984


In this paper, we examine several aspects of saving and dissaving after retirement. First, we argue that existing evidence on bequeathable age-wealth profiles is suspect, and provide new evidence based on longitudinal data indicating that significant dissaving may occur,particularly among single individuals and early retirees. Second, we argue that, in the presence of annuities, estimates of dissaving should be adjusted by including the simple discounted value of benefits in total wealth. Such adjustments reveal relatively little dissaving among any group of retirees. Finally, we test the pure life cycle hypothesis by observing the behavioral response of rates of accumulation to involuntary annuitization, and find empirical refutation of life cycle implications.

Suggested Citation

Bernheim, B. Douglas, Dissaving after Retirement: Testing the Pure Life Cycle Hypothesis (July 1984). NBER Working Paper No. w1409, Available at SSRN: https://ssrn.com/abstract=327127

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