Supporting Seniors: How Low-Income Elderly Individuals Respond to a Retirement Support Program

Insufficient savings for retirement expose individuals to financial vulnerability in the post-retirement years and prompt governments to consider support measures. We study a government cash subsidy program for the low-income elderly population in Singapore. Using comprehensive, high-frequency transaction data, we find that elderly individuals increase spending by 0.7 dollars per dollar of subsidy received. We also show that they increase food expenditure and the variety of retail purchases. The subsidy program increases spending more for those more liquidity constrained, regardless of their income level. We also provide evidence that a cash transfer is more effective than a voucher transfer in stimulating consumption.