
Investing 3: Smooth Spending & The 401K
Planet Money Summer School
The Life Cycle Hypothesis - Why Consumption Is So Hard
There is an idea in economics called the life cycle hypothesis that tries to explain how people use consumption smoothing throughout their lives. So it starts when you're born, building up human capital through education. And then you're in your earning years - most your pay increases happen in your twenties and thirties. Then you get to middle age, and that's your sort of pique pay and it stays like that for a while. And thenYou retire, and then, ah, you then have hopefully built up enough savings,. You consume out of that in your irement, and then you dies a lifetimeand in 30 seconds.
00:00
Transcript
Play full episode
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.