What accounts for the variation in retirement wealth among US households?

Even among households with similar socioeconomic characteristics,sm,ling and wealth vary, considerably. Life-cycle models attribute this variation to differences ill time preference rates, risk tolerance, exposure to uncertainty, relative tastes for work and leisure at advanced ages, and income replacement rates. These factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile. Using the Panel Study of Income Dynamics and the Consumer Expenditure Sun,ey, we find little support for these implications. The data are instead consistent with "rule of thumb," "mental accounting, " or hyperbolic discounting theories of wealth accumulation.