How Portfolios Evolve After Retirement: Evidence From Australia
AbstractHouseholds in many developed economies now reach retirement with lump sums of financial wealth accumulated through defined contribution retirement plans. Managing wealth from individual accumulations and public provision is critical to retirement welfare. We study the dynamics of retirement wealth and asset allocation using the three wealth waves of the Household Income and Labour Dynamics in Australia (HILDA) panel survey. We find significant influences of ageing on asset holdings with older households preferring less risk and more liquidity, while maintaining ownership of the family home. In terms of absolute changes in wealth the average retired household accumulated in 2002-06 and decumulated 2006-10 in line with financial market trends. More diversified households did better. The probability of retired households depleting non-housing wealth to less than one month’s Age Pension payment increased over the sample. Finally, in contrast to the US, the overall effect of health shocks on the wealth of retired Australian households is minimal.
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Bibliographic InfoPaper provided by Economics Discipline Group, UTS Business School, University of Technology, Sydney in its series Working Paper Series with number 11.
Date of creation: 01 Jun 2013
Date of revision:
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Retirement wealth; Life-cycle saving; Public pension; Portfolio choice;
Other versions of this item:
- Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2013. "How Portfolios Evolve After Retirement: Evidence from Australia," CAMA Working Papers 2013-40, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-06-24 (Economics of Ageing)
- NEP-ALL-2013-06-24 (All new papers)
- NEP-DEM-2013-06-24 (Demographic Economics)
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