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Do you need less money in retirement?

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  • Celidoni, Martina
  • Weber, Guglielmo

Abstract

The literature has documented a one-off drop in consumption at retirement in Italy. We show that respondents’ subjective evaluation of the minimum amount of money needed “to live comfortably but not in luxury” drops at retirement as well. This finding supports the idea that, even if expenditure falls at retirement, this may have the same effect on money needed, hence no effect on the marginal utility of consumption.

Suggested Citation

  • Celidoni, Martina & Weber, Guglielmo, 2020. "Do you need less money in retirement?," Economics Letters, Elsevier, vol. 189(C).
    • Handle: RePEc:eee:ecolet:v:189:y:2020:i:c:s0165176520300471
    DOI: 10.1016/j.econlet.2020.109026
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    References listed on IDEAS

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    1. Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2009. "The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 99(5), pages 2209-2226, December.
    2. Marco Manacorda & Enrico Moretti, 2006. "Why do Most Italian Youths Live with Their Parents? Intergenerational Transfers and Household Structure," Journal of the European Economic Association, MIT Press, vol. 4(4), pages 800-829, June.
    3. Emma Aguila & Orazio Attanasio & Costas Meghir, 2011. "Changes in Consumption at Retirement: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 1094-1099, August.
    4. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
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    More about this item

    Keywords

    Retirement consumption puzzle; Minimum spending question; RDD;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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