Working paper 06/138 - Abstract

The retirement-consumption puzzle and involuntary early retirement: Evidence from the British Household Panel Survey (PDF, file 857 KB) (PDF, 856kB)

Sarah Smith

This paper uses data from the British Household Panel Survey (BHPS) to shed further light on the fall in consumption at retirement (the "retirement-consumption puzzle"). Comparing food spending of men retiring involuntarily early (through ill health or redundancy) with spending of men who retire voluntarily, it finds a significant fall in spending only for those who retire involuntarily. This is consistent with the observed fall in spending being linked to a negative wealth shock for some retirees.

Economic Journal, March 2006, 116, C130-C148

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