Wealth Holdings and Portfolio Allocation of Older Couples: The Role of Spouses’ Marital History
This paper analyses the role of the elderly couples’ past marital history in determining their current wealth holdings and portfolio allocation using data from the first wave of the Health and Retirement Study. The results suggest that, for those who remarry after divorce, there is recovery from the negative shocks of marital breakdowns, which occur earlier in the life cycle. While the net cost of divorce in terms of household wealth accumulation is higher for men than it is for women, in the “long run” it turns out to be statistically insignificant for both gender groups. Therefore, the elderly couples’ marital history plays a minor role in explaining the dispersion in their wealth holdings near the end of the life cycle. However, the results also show that both the probability of owning a particular asset and the fraction of net worth allocated to that asset might significantly vary depending on the elderly couples’ marital experience. Most importantly, the couples in which the spouses have divorced before invest relatively heavily on non-housing assets rather than owner occupied housing. The further analysis of financial wealth only yields that the ownership and allocation of financial assets are not affected in a major significant way.
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- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997.
"What Accounts for the Variation in Retirement Wealth Among U.S. Households?,"
NBER Working Papers
6227, National Bureau of Economic Research, Inc.
- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 2001. "What Accounts for the Variation in Retirement Wealth among U.S. Households?," American Economic Review, American Economic Association, vol. 91(4), pages 832-857, September.
- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?," Working Papers 97035, Stanford University, Department of Economics.
- Pamela Smock, 1993. "The economic costs of marital disruption for Young Women over the past two decades," Demography, Springer, vol. 30(3), pages 353-371, August.
- Marianne E. Page & Ann Huff Stevens, 2004. "The Economic Consequences of Absent Parents," Journal of Human Resources, University of Wisconsin Press, vol. 39(1).
- Gábor Kézdi & Robert J. Willis, 2003. "Who Becomes a Stockholder? Expectations, SUbjective Uncertainty, and Asset Allocation," Working Papers wp039, University of Michigan, Michigan Retirement Research Center.
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