We estimate a model of savings for retired couples and singles who face longevity and medical expense risks and in which couples can leave bequests both when the first spouse dies and when the last spouse dies. We show that saving motives vary by marital status, permanent income, and age. We find that most households save more for medical expenses than for bequests but that richer households and couples, who hold most of the wealth, save more for bequests. As a result, bequest motives are a key determinant of aggregate retirement wealth.
Authors
Mariacristina De Nardi
Mariacristina is an Research Fellow at the IFS and also a Professor in the Economics Department at the University of Minnesota.
Eric French
Eric is the Montague Burton Professor of Industrial Relations and Labour Economics at the University of Cambridge and Professor of Economics at UCL.
Rory McGee
Rory is a Research Associate at the IFS and an Assistant Professor in the Department of Economics at the University of Western Ontario.
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