Life-cycle theory of savings

Life-cycle theory of savings is the common pattern that many people save little or borrow heavily early in life, save more in the middle of life, and then draw upon their accumulated savings later in life.

Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Life-cycle theory of savings. The common pattern that many people save little or borrow heavily early in life, save more in the middle of life, and then draw upon their accumulated savings later in life.