Is there a retirement consumption puzzle in Japan? Evidence based on panel data on households in the agricultural sector

Taking advantage of annual panel data on part-time farmer households, this paper investigates whether a retirement consumption puzzle is observed in Japan. Our analysis shows that households’ expenditure does decline after the retirement of the household head and that changes in family size and in life-style/preferences cannot fully explain this decline. Unanticipated negative income shocks such as health problems appear to provide a partial explanation. However, our analysis also suggests that there are myopic households that lacked the discipline to accumulate sufficient savings for retirement.