Abstract: In this paper, firstly the consumers’ life cycle is divided into pre-retirement and retirement according to the characteristics of China's income system, and intertemporal budget constraints of life cycle consumption theory were set in the new classical economics; Under uncertain lifetime, the consumers’ optimal consumption path is derived. Moreover, according to Tianjin household survey data during January 1988 to December 2008, the dynamic pseudo-panel data model provided empirical evidence for theoretical results. In addition, empirical findings are: (1) the family still continued the tradition of spending habits, if the head of the household was born before 1965. So, improving social security system, changing their concept of consumption is the only way to stimulate domestic demand; (2) the intertemporal substitution flexibility is close to zero (0.008), that is, urban residents prefer immediate consumption; (3) interest rates tools of monetary policy plays little role in stimulating the consumption of urban residents.

Key words: Uncertain Lifetime, Intertemporal Optimal Consummation, Dynamic Pseudo-panel Model, Urban Household Survey Data