Why Do Retired Households Draw Down Their Wealth So Slowly

Bibliographic Data

ID14855133
AuthorsEric French (0000-0002-1029-3738, Eric French is the Montague Burton Professor of Industrial Relations and Labour Economics, University of Cambridge, Cambridge, United Kingdom. He is also a Research Fellow, Centre for Economic Policy Research, and Co-Director at the ESRC Centre for the Microeconomic Analysis of Public Policy, Institute for Fiscal Studies, both in London, United Kingdom.), John Bailey Jones (Federal Reserve Bank of Richmond), Rory McGee (0009-0001-1795-085X, Rory McGee is an Assistant Professor of Economics, University of Western Ontario, London, Ontario, Canada. He is also an International Research Associate, Institute for Fiscal Studies, London, United Kingdom. .)
Year2023
Volume37
Issue4
Pages91-113
Publication date2023-11-01
Open AccessYes
TypeARTICLE
VenueThe Journal of Economic Perspectives (JOURNAL)
Journal identifiersISSN: 0895-3309 • E-ISSN: 1944-7965
PublisherAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.37.4.91
OpenAlexW4388291686
LanguageEN
Citations received2
References cited15

Retired households, especially those with high lifetime income, decumulate their wealth very slowly, and many die leaving large estates. The three leading explanations for the “retirement savings puzzle” are the desire to insure against uncertain lifespans and medical expenses, the desire to leave bequests to one’s heirs, and the desire to remain in one’s own home. We discuss the empirical strategies used to differentiate these motivations, most of which go beyond wealth to exploit additional features of the data. The literature suggests that all the motivations are present, but has yet to reach a consensus about their relative importance

Demographic economics · Economics · Exploit · Labour economics · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Insurance, Mortality, Demography, Risk Management

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