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Saving and consumption patterns of the elderly: the German case
Journal of Population Economics
|November 1, 1992
Summary
Elderly individuals in Germany do not follow the pure life-cycle theory, as their savings rates increase after age 70, contrary to predictions of wealth decumulation.
Area of Science:
- Economics
- Gerontology
- Sociology
Background:
- The pure life-cycle theory predicts that individuals will dissave during retirement.
- Empirical evidence on elderly saving and consumption behavior is crucial for understanding retirement economics.
Purpose of the Study:
- To empirically analyze the saving and consumption choices of the elderly in former West Germany.
- To compare observed age-consumption profiles with predictions from the pure life-cycle theory.
Main Methods:
- Utilized data from the German Income and Expenditure Surveys for 1978 and 1983.
- Conducted an empirical analysis of saving and consumption patterns across different age groups of the elderly.
Main Results:
- Observed age-consumption profiles significantly differ from those predicted by the pure life-cycle theory.
- Wealth declines between ages 60 and 70 but increases again after age 70.
- The very old exhibit the highest savings rates, accumulating wealth rather than decumulating it.
Conclusions:
- The pure life-cycle theory does not fully capture the saving and consumption behavior of the elderly in Germany.
- Older individuals, particularly the very old, demonstrate a tendency towards wealth accumulation, challenging traditional economic models.