Saving preferences after retirement

Jennifer Alonso-García, Hazel Bateman, Johan Bonekamp, Arthur van Soest and Ralph Stevens

Journal of Economic Behavior & Organization, 2022, vol. 198, issue C, 409-433

Abstract: We investigate the importance of alternative motives for saving and spending patterns after retirement in the Netherlands and Australia. Using an online experimental survey, we elicit the impact on advised spending patterns and underlying saving motives of alternative retirement drawdown designs, ranging from complete flexibility in Australia to full annuitization in the Netherlands, and of major life events such as becoming frail or losing a spouse. We find that important motives for spending and saving after retirement in both countries are the desire to remain financially independent and to ensure that it is possible to enjoy life now as well as later. However, consistent with differences in real world pension settings, life span risk is more important and liquidity less important in Australia than in the Netherlands. With the exception of inter vivos transfers to a surviving spouse, the bequest motive is not important in either country. Our results suggest that an important reason for the widespread behaviour of retirees to hold on to their wealth might be the desire to hold precautionary savings for health and long-term care expenditures. We also find that individuals revise their saving motives in anticipation of major life events but are less responsive to variation in ‘experimental’ retirement drawdown arrangements, remaining aligned to the prevailing institutional arrangements in their country.

Keywords: Saving motives; Asset decumulation; Pension design; Consumption smoothing (search for similar items in EconPapers)
JEL-codes: D14 D31 J14 J26 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:198:y:2022:i:c:p:409-433

DOI: 10.1016/j.jebo.2022.04.005

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