3min chapter

Planet Money cover image

One economist's take on popular advice for saving, borrowing, and spending

Planet Money

CHAPTER

Traditional Economics and the Lifecycle Hypothesis Theory

Lifecycle hypothesis theory says you should have zero negative or at least very low savings rates when you're young and then in mid-life, you should be a super saver. Popular authors tend to advise you to smooth your savings rates rather than smoothing your consumption. They say that you should be saving a consistent percentage of your income kind of throughout your life.

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