How Portfolios Evolve After Retirement: Evidence from Australia
Households 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. Finally, in contrast to the US, the overall effect of health shocks on the wealth of retired Australian households is minimal.
|Date of creation:||Jun 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 2601|
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: http://cama.crawford.anu.edu.au
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
- Susan Thorp & Hardy Hulley & Rebecca McKibbin & Andreas Pedersen, 2009.
"Means-Tested Income Support, Portfolio Choice and Decumulation in Retirement,"
Research Paper Series
248, Quantitative Finance Research Centre, University of Technology, Sydney.
- Hardy Hulley & Rebecca Mckibbin & Andreas Pedersen & Susan Thorp, 2013. "Means-Tested Public Pensions, Portfolio Choice and Decumulation in Retirement," The Economic Record, The Economic Society of Australia, vol. 89(284), pages 31-51, 03.
- Susan Thorp & Hardy Hulley & Rebecca McKibbin & Andreas Pedersen, 2009. "Means-Tested Income Support, Portfolio Choice And Decumulation In Retirement," CAMA Working Papers 2009-12, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Steven F. Venti & David A. Wise, 2001.
"Aging and Housing Equity: Another Look,"
NBER Working Papers
8608, National Bureau of Economic Research, Inc.
- Marcel Fischer & Michael Z. Stamos, 2013. "Optimal Life Cycle Portfolio Choice with Housing Market Cycles," Review of Financial Studies, Society for Financial Studies, vol. 26(9), pages 2311-2352.
- Veld-Merkoulova, Yulia V., 2011. "Investment horizon and portfolio choice of private investors," International Review of Financial Analysis, Elsevier, vol. 20(2), pages 68-75, April.
- Buly A Cardak & Roger K. Wilkins, 2008.
"The Determinants of Household Risky Asset Holdings: Australian Evidence on Background Risk and Other Factors#,"
2008.05, School of Economics, La Trobe University.
- Cardak, Buly A. & Wilkins, Roger, 2009. "The determinants of household risky asset holdings: Australian evidence on background risk and other factors," Journal of Banking & Finance, Elsevier, vol. 33(5), pages 850-860, May.
- Buly A Cardak & Roger K. Wilkins, 2008. "The Determinants of Household Risky Asset Holdings: Australian Evidence on Background Risk and Other Factors#," Working Papers 2008.05, School of Economics, La Trobe University.
- James Poterba & Steven Venti & David A. Wise, 2013.
"Health, Education, and the Postretirement Evolution of Household Assets,"
Journal of Human Capital,
University of Chicago Press, vol. 7(4), pages 297 - 339.
- James M. Poterba & Steven F. Venti & David A. Wise, 2013. "Health, Education, and the Post-Retirement Evolution of Household Assets," NBER Working Papers 18695, National Bureau of Economic Research, Inc.
- Richard Finlay, 2012. "The Distribution of Household Wealth in Australia: Evidence from the 2010 HILDA Survey," RBA Bulletin, Reserve Bank of Australia, pages 19-27, March.
- Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
- Rosen, H.S.Harvey S. & Wu, Stephen, 2004.
"Portfolio choice and health status,"
Journal of Financial Economics,
Elsevier, vol. 72(3), pages 457-484, June.
- Michael Haliassos and Alexander Michaelides, 2001. "Calibration and Computation of Household Portfolio Models," Computing in Economics and Finance 2001 194, Society for Computational Economics.
- Heaton, John & Lucas, Deborah, 2000. "Portfolio Choice in the Presence of Background Risk," Economic Journal, Royal Economic Society, vol. 110(460), pages 1-26, January.
- James Poterba & Steven Venti & David Wise, 2011.
"The Composition and Drawdown of Wealth in Retirement,"
Journal of Economic Perspectives,
American Economic Association, vol. 25(4), pages 95-118, Fall.
- James M. Poterba & Steven F. Venti & David A. Wise, 2011. "The Composition and Draw-down of Wealth in Retirement," NBER Working Papers 17536, National Bureau of Economic Research, Inc.
- Courtney Coile & Kevin Milligan, 2006.
"How Household Portfolios Evolve After Retirement: The Effect of Aging and Health Shocks,"
NBER Working Papers
12391, National Bureau of Economic Research, Inc.
- Courtney Coile & Kevin Milligan, 2009. "How Household Portfolios Evolve After Retirement: The Effect Of Aging And Health Shocks," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(2), pages 226-248, 06.
- Geoffrey Kingston & Susan Thorp, 2004.
"Annuitization and Asset Allocation with HARA Utlity,"
Econometric Society 2004 Australasian Meetings
248, Econometric Society.
- Kingston, Geoffrey & Thorp, Susan, 2005. "Annuitization and asset allocation with HARA utility," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(03), pages 225-248, November.
- Eric French & Mariacristina De Nardi & John Bailey Jones & Olesya Baker & Phil Doctor, 2006. "Right before the end: asset decumulation at the end of life," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 2-13.
- Cho, Sang-Wook (Stanley) & Sane, Renuka, 2013.
"Means-Tested Age Pensions And Homeownership: Is There A Link?,"
Cambridge University Press, vol. 17(06), pages 1281-1310, September.
- Sang-Wook (Stanley) Cho & Renuka Sane, 2011. "Means-Tested Age Pension and Homeownership: Is There a Link?," Discussion Papers 2011-02, School of Economics, The University of New South Wales.
- Samuelson, Paul A, 1969. "Lifetime Portfolio Selection by Dynamic Stochastic Programming," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 239-46, August.
- Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
- Karen Holden & Richard Burkhauser & Daniel Feaster, 1988. "The timing of falls into poverty after retirement and widowhood," Demography, Springer;Population Association of America (PAA), vol. 25(3), pages 405-414, August.
- Merton, Robert C, 1969. "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 247-57, August.
- Meliyanni Johar & Glenn Jones & Elizabeth Savage, 2012. "Healthcare Expenditure Profile of Older Australians: Evidence from Linked Survey and Health Administrative Data," Economic Papers, The Economic Society of Australia, vol. 31(4), pages 451-463, December.
- Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June.
When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2013-40. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cama Admin)
If references are entirely missing, you can add them using this form.