Dissaving after Retirement: Testing the Pure Life Cycle Hypothesis
In: Issues in Pension Economics
In this paper, we examine several aspects of saving and dissaving after retirement. First, we argue that existing evidence on bequeathable age-wealth profiles is suspect, and provide new evidence based on longitudinal data indicating that significant dissaving may occur,particularly among single individuals and early retirees. Second, we argue that, in the presence of annuities, estimates of dissaving should be adjusted by including the simple discounted value of benefits in total wealth. Such adjustments reveal relatively little dissaving among any group of retirees. Finally, we test the pure life cycle hypothesis by observing the behavioral response of rates of accumulation to involuntary annuitization, and find empirical refutation of life cycle implications.
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- Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
- B. Douglas Bernheim & Andrei Shleifer & Lawrence H. Summers, 1986. "Bequests as a Means of Payment," NBER Working Papers 1303, National Bureau of Economic Research, Inc.
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- Davies, James B, 1981. "Uncertain Lifetime, Consumption, and Dissaving in Retirement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 561-77, June.
- Mervyn A. King & Louis Dicks-Mireaux, 1981. "Asset Holdings and the Life Cycle," NBER Working Papers 0614, National Bureau of Economic Research, Inc.
- Ferber, Robert, et al, 1969. "Validation of a National Survey of Consumer Financial Characteristics: Savings Accounts," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 436-44, November.
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