Following the American Psychological Association’s Guidelines
According to life-cycle hypothesis of consumption and savings, an individual's consumption and saving is determined by the average of this individual's lifelong income. Individual, at the beginning of his life, do not earn any income, however, with an expectation of income in his total life, he defines an average spending. Because he does not have any income at the beginning of his life, he borrows money. (Negative saving or borrowing time)
After he starts working he starts saving money and pays his debts from the beginning his life. After finishing with his debts, he saves money and makes investments. During his working life, he continues the same amount of consumption with the consumption at his beginning his life. (Positive saving, paying debts and making investment time)
After a certain years of working, this individual gets retired. After that he does not receive any income from working. He has some investment gains left with him to spend. He spends all the returns from his investments and also he spends all his investments' capital money also. When he dies, he does not leave any money to his offsprings. This model is not an altruistic one. During his retirement time, he continues the same amount of consumption with the consumption at the beginning of his life and at his working time. (Retirement time dissavings)
In this model, temprory income changes do not influence individual's consumption, he always continues the same amount of consumption. If any very large change in income, might change his lifetime average income, thus he might change lifetime consumption. Consequently, an individual's lifetime average consumption is a function of his lifetime average income.
References
Mayer, Thomas. (1972). Permanent Income, Wealth and Consumption. University of California Press.
Wise, David A. (2008). Topics in the Economics of Aging. National Bureau of Economic Research.
