Using data from China's Urban Household Survey and exploiting China's mandatory
retirement policy, we use the regression discontinuity approach to estimate the impact of
retirement on household expenditures. Retirement reduces total non-durable expenditures by
21 percent. Among the categories of non-durable expenditures, retirement reduces
work-related expenditures and expenditures on food consumed at home but has an
insignificant effect on expenditures on entertainment. After excluding these three components,
retirement does not have an effect on the remaining non-durable expenditures. It suggests that
the retirement consumption puzzle might not be a puzzle if an extended life-cycle model with
home production is considered.