Life-cycle hypothesis

Life-cycle hypothesis is the theory of consumption that emphasizes the role of saving and borrowing as transferring resources from those times in life when income is high to those times in life when income is low, such as from working years to retirement.

Definition

According to Macroeconomics by Mankiw (7th edition),

Life-cycle hypothesis. The theory of consumption that emphasizes the role of saving and borrowing as transferring resources from those times in life when income is high to those times in life when income is low, such as from working years to retirement.