Changes in Consumption Needs and Purchases at Retirement

Abstract

In this paper, we study the changes in needs and purchases post-retirement using a unique survey of elderly Australians. Six categories of goods and services are studied, and the research objectives are threefold. First, we study the factors related to changes in needs and purchases in retirement. We find that households where finances are managed by females are more likely to need less housing, household goods and medical care. We also find that financially literate households tend to need and purchase fewer gifts or donations. Second, the objective is to find the drivers of affordability of needs in retirement. We show that older, low-income and single-female households cannot afford their needs for household goods and medical care. Third, we analyze retirees' self-stated reasons for changes in purchases of goods and services. Via text analysis, we find that while rising costs is the primary reason for an increase in purchases, many retirees moderate expenditures through better money management.

Keywords: Consumption; Retirement expenditure; Affordability; Text analysis; Gender of decision maker

JEL Classification: D12; E21; J14; J16