Inequality in Comprehensive Wealth

We create an annualized measure of comprehensive household wealth using the 1998–2022 waves of the Health and Retirement Study and examine heterogeneity in retirement resources across households, cohorts, and time. We augment traditional net worth with the actuarial present values of expected future payment streams from labor-market earnings, Social Security, defined-benefit pensions, annuities, life insurance, and government transfers. We then calculate an annualized measure of that lump sum by converting it into an actuarially fair joint life annuity that we call annualized comprehensive wealth (ACW). We find that the median ACW increases throughout retirement, indicating that the median household is spending down its total resources more slowly than its joint life expectancy is shortening. In addition, we document considerable heterogeneity in the levels and trajectories of ACW across cohorts, education groups, and race. Notably, we find that the pattern of rising ACW is largely driven by college-educated and white households. Other groups show relatively flat or declining trajectories of ACW after retirement. We further explore the heterogeneity of ACW with the help of recentered influence function regressions. We show that inequality in ACW is associated with higher household-specific rates of return, higher education, and greater concentrations of single-headed and Black and Hispanic households.