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.
Eric is the Montague Burton Professor of Industrial Relations and Labour Economics at the University of Cambridge and Professor of Economics at UCL.
Research Associate University of Western Ontario
Rory is a Research Associate at the IFS and an Assistant Professor in the Department of Economics at the University of Western Ontario.
Vice President of Microeconomic Analysis Research Department at the Federal Reserve Bank of Richmond
Working Paper details
- Institute for Fiscal Studies
J, Bailey Jones and E, French and R, McGee. (2022). Savings after retirement. 22/53. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/savings-after-retirement (accessed: 23 February 2024).
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