Wealth Depletion and Life Cycle Consumption by the Elderly

The objective of the work reported in this paper is to find if the consumption data from the six waves of the Retirement History Survey are consistent with the life cycle hypothesis of consumption and to test the importance of a bequest motive for saving. The 12 data items which are used cover an estimated 36% of total consumption; the most important datum is food consumption. The findings support the life cycle hypothesis: as required, measured consumption among the elderly declines with age. A test of the bequest motive for saving based on the variation by extended family stricture in consumption paths provides no support for a bequest motive.