Time preferences over the life cycle and household saving puzzles

•We study whether and how time preferences change over the life cycle, using representative long-term panel data.•Discount rates decrease with age and the decline is remarkably linear over the life cycle.•Decreasing discount rates help a canonical life-cycle model explain the saving puzzles of households undersaving when young and oversaving after retirement.•Relative to the model with constant discounting, the model’s fit to consumption and asset data profiles substantially improves.