The retirement consumption puzzle in Japan

In this paper, I examine, using Japanese cross-section data, whether "the retirement consumption puzzle" exists, and if so, why. My results show that both the anticipated consumption during retirement of working households and the actual consumption during retirement of retired households are much lower than the actual consumption before retirement of working households. I find that the anticipated decline in consumption after retirement is due primarily to the anticipated decline in family size after retirement, but that it might also be due partly to other factors. These results suggest that consumption does indeed decline after retirement, but that this decline is largely due to factors that are consistent with the life cycle hypothesis.