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Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership

Charles Horioka () and Luigi Ventura
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Luigi Ventura: Department of Economics and Law, Sapienza, University of Rome, ITALY

No DP2022-34, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: In this paper, we use micro data on a large number of European countries from the Survey of Health, Ageing and Retirement in Europe (SHARE) to examine the wealth accumulation (saving) behavior of the retired elderly in Europe. To summarize our main findings, we find that less than half of the retired elderly in Europe are decumulating their wealth and that the average wealth accumulation rate of the retired elderly in Europe is positive though relatively moderate (6.6% over a 3-year period). These findings strongly suggest that the Wealth Decumulation (or Retirement Saving) Puzzle (the tendency of the retired elderly to not decumulate their wealth or to decumulate their wealth more slowly than expected) applies in the case of Europe. Moreover, our regression results suggest that bequest motives, generous public pension systems, and the reluctance of retired elderly homeowners to sell or borrow against their owner-occupied housing are the primary explanations for the existence of the Wealth Decumulation Puzzle in Europe.

Keywords: Aged; Bequests; Bequest intentions; Bequest motives; Dissaving; Elderly; Europe; Household saving; Inheritances; Intergenerational transfers; Life cycle model or hypothesis; Precautionary saving; Retired elderly; Retirement Saving Puzzle; saving; SHARE; Wealth accumulation; Wealth decumulation; Wealth Decumulation Puzzle (search for similar items in EconPapers)
JEL-codes: D14 D15 E21 H55 J14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2022-09
New Economics Papers: this item is included in nep-age and nep-hea
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2022-34.pdf First version, 2022 (application/pdf)

Related works:
Working Paper: Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership (2022) Downloads
Working Paper: Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership (2022) Downloads
Working Paper: Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership (2022) Downloads
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