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Right before the end: asset decumulation at the end of life

Author

Listed:
  • Olesya Baker
  • Mariacristina De Nardi
  • Phil Doctor
  • Eric French
  • John Bailey Jones

Abstract

Using data from the Asset and Health Dynamics of the Oldest Old survey, the authors find that the assets of people who die decline much faster than the assets of people who survive, even after controlling for age, sex, and initial asset levels. Out-of-pocket medical expenses right before death can deplete the assets of many elderly households and constitute an important reason to keep assets in old age.

Suggested Citation

  • Olesya Baker & Mariacristina De Nardi & Phil Doctor & Eric French & John Bailey Jones, 2006. "Right before the end: asset decumulation at the end of life," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 30(Q III), pages 2-13.
    • Handle: RePEc:fip:fedhep:y:2006:i:qiii:p:2-13:n:v.30no.3
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    References listed on IDEAS

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    Cited by:

    1. Luigi Ventura & Charles Yuji Horioka, 2020. "The wealth decumulation behavior of the retired elderly in Italy: the importance of bequest motives and precautionary saving," Review of Economics of the Household, Springer, vol. 18(3), pages 575-597, September.
    2. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Savings After Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 177-204, October.
    3. Niimi, Yoko & Horioka, Charles Yuji, 2019. "The wealth decumulation behavior of the retired elderly in Japan: The relative importance of precautionary saving and bequest motives," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 52-63.
    4. Rory McGee & Eric French & John Bailey Jones, 2022. "Saving After Retirement," University of Western Ontario, Departmental Research Report Series 202213, University of Western Ontario, Department of Economics.
    5. Margherita Borella & Mariacristina De Nardi & Eric French, 2018. "Who Receives Medicaid in Old Age? Rules and Reality," Fiscal Studies, John Wiley & Sons, vol. 39(1), pages 65-93, March.
    6. Fang, H., 2016. "Insurance Markets for the Elderly," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 237-309, Elsevier.
    7. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee & Rachel Rodgers, 2020. "Medical Spending, Bequests, and Asset Dynamics around the Time of Death," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 4, pages 135-157.
    8. Moore, Rachel & Pecoraro, Brandon, 2020. "Macroeconomic implications of modeling the Internal Revenue Code in a heterogeneous-agent framework," Economic Modelling, Elsevier, vol. 87(C), pages 72-91.
    9. De Nardi, Mariacristina & Yang, Fang, 2016. "Wealth inequality, family background, and estate taxation," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 130-145.
    10. Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2016. "How Portfolios Evolve after Retirement: Evidence from Australia," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 241-267, June.
    11. James M. Poterba & Steven F. Venti & David A. Wise, 2015. "What Determines End-of-Life Assets? A Retrospective View," NBER Chapters, in: Insights in the Economics of Aging, pages 127-157, National Bureau of Economic Research, Inc.
    12. Olesya Baker & Phil Doctor & Eric French, 2007. "Asset rundown after retirement: the importance of rate of return shocks," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 31(Q II), pages 48-65.
    13. Mariacristina De Nardi & Eric French & John Bailey Jones, 2015. "Couples' and Singles’ Savings After Retirement," Working Papers wp322, University of Michigan, Michigan Retirement Research Center.

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    Keywords

    Households - Economic aspects; Wealth;

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