A New Look at the Wealth Adequacy of Older U.S. Households

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

No 2008-12, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: We examine the current wealth adequacy of older U.S. households using the 1998-2006 waves of the Health and Retirement Study (HRS). We find that the median older U.S. household is reasonably well situated, with a ratio of comprehensive net wealth to present value poverty- line wealth of about 3.9 in 2006. About 18 percent of households, however, have less wealth than would be needed to generate 150 percent of poverty-line income over their expected future lifetimes. We see similar patterns of wealth adequacy when we examine ratios of annualized comprehensive wealth to pre-retirement earnings. Comparing the leading edge of the baby boomers in 2006 to households of the same age in 1998, we find that the baby boomers show slightly less wealth, in real terms, than their elders did, but still have appear to have adequate resources at the median. Moreover, we find a rising age profile of annualized wealth, even within households over time and after controlling for other factors, suggesting that older households are not spending their wealth as quickly as their survival probabilities are falling.

Pages: 31 pages
Date: 2008-07
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Citations: View citations in EconPapers (13)

Published in Review of Income and Wealth, 2008, Vol. 54(4), pp. 616-642.

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Related works:
Journal Article: A NEW LOOK AT THE WEALTH ADEQUACY OF OLDER U.S. HOUSEHOLDS (2008)
Working Paper: A new look at the wealth adequacy of older U.S. households (2008)
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