How portfolios evolve after retirement: evidence from Australia

Alexandra Spicer, Olena Stavrunova () and Susan Thorp

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Households in many countries reach retirement with lump sums of financial wealth accumulated in defined contribution (DC) retirement plans. Retired households need to manage risks and generate income from their savings. We study the dynamics of retirement wealth and portfolio allocation using the three wealth waves of the Household, Income and Labour Dynamics in Australia panel survey. The average retired household maintained or accumulated wealth in 2002-06 and decumulated in 2006-10 consistent with trends in financial asset prices. At older ages, households prefer portfolios with less risk and more liquidity, while maintaining ownership of the family home. The probability of households exhausting financial assets increased over the sample but households who depleted financial wealth did not liquidate their housing wealth at higher rates than other households. In contrast to the U.S., the overall effect of health shocks on the wealth of retired Australian households is minimal but financial shocks have large effects.

Keywords: Retirement wealth; Life-cycle saving; Public pension; Portfolio choice (search for similar items in EconPapers)
JEL-codes: D91 E21 G11 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2015-11
New Economics Papers: this item is included in nep-age and nep-mac
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https://cama.crawford.anu.edu.au/sites/default/fil ... stavrunova_thorp.pdf (application/pdf)

Related works:
Journal Article: How Portfolios Evolve after Retirement: Evidence from Australia (2016)
Working Paper: How Portfolios Evolve After Retirement: Evidence from Australia (2013)
Working Paper: How Portfolios Evolve After Retirement: Evidence From Australia (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2015-39

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