The Trajectory of Wealth in Retirement

David Love, Michael Palumbo and Paul Smith
Additional contact information
David Love: Williams College, http://econ.williams.edu
Paul Smith: Federal Reserve Board, http://www.federalreserve.gov
Authors registered in the RePEc Author Service: David R.F. Love and David Love ()

No 2008-10, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: In this paper, we develop a measure of household resources that converts total financial, nonfinancial, and annuitized assets into an expected annual amount of wealth per person in retirement. We use this measure, which we call "annualized comprehensive wealth," to investigate spend-down behavior among a panel of older households in the Health and Retirement Study (HRS) from 1998 to 2006. Our analysis indicates that for most retired households, comprehensive wealth balances decline much more slowly than their remaining life expectancies, so that the predominate trend is for real annualized wealth actually to rise significantly with age over the course of retirement. Comparing the estimated age profiles for annualized wealth with profiles simulated from several different life cycle models, we find that a model that takes into account uncertain longevity, random medical expenses, and intended bequests lines up best with the broad patterns of rising annualized wealth in the HRS.

Keywords: Retirement wealth; life-cycle saving; mortality risk; precautionary saving; bequests; risk and uncertainty. (search for similar items in EconPapers)
JEL-codes: D91 E21 I10 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2008-06
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Published in Journal of Public Economics, 2009, Vol. 93 (February), pp. 191-208.

Downloads: (external link)
https://web.williams.edu/Economics/wp/lovetrajectory_lps2008.pdf Full text (application/pdf)

Related works:
Journal Article: The trajectory of wealth in retirement (2009)
Working Paper: The Trajectory of Wealth in Retirement (2008)
Working Paper: The trajectory of wealth in retirement (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wil:wileco:2008-10

Ordering information: This working paper can be ordered from

The price is Free.

Access Statistics for this paper

More papers in Department of Economics Working Papers from Department of Economics, Williams College Williamstown, MA 01267. Contact information at EDIRC.
Bibliographic data for series maintained by Stephen Sheppard ( this e-mail address is bad, please contact ).