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End-of-Life Liquidity

Author

Listed:
  • Neha Bairoliya

    (University of Southern California)

  • Giovanni Gallipoli

    (Vancouver School of Economics, UBC)

  • Kathleen McKiernan

    (Vanderbilt University)

Abstract

The interaction between late-life uncertainty and end-of-life (EOL) motives generates demand for death-contingent liquidity, shaping saving, insurance, and labor-supply behaviour. Using evidence on wills, life insurance, and bequest intentions, we document the prevalence of EOL motives across household types. A quantitative life-cycle model embeds three motives—precautionary, survivor, and warm-glow—and exploits the asymmetry between liquid wealth and life insurance to identify EOL preferences. We examine how these motives interact with Social Security's illiquid annuity and assess reforms that replace part of annuity benefits with guaranteed death-contingent payouts or expand access to actuarially fair life insurance. Both policies generate portfolio "de-risking," shifting resources toward guaranteed EOL liquidity. Significant welfare gains accrue to single, low-wealth individuals, a group often overlooked in the debate over EOL motives.

Suggested Citation

  • Neha Bairoliya & Giovanni Gallipoli & Kathleen McKiernan, 2026. "End-of-Life Liquidity," Working Papers 2025-010, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2025-010
    Note: M
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Bairoliya_Gallipoli_McKiernan_2025_end-life-liquidity.pdf
    File Function: First version, November 12, 2025
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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G52 - Financial Economics - - Household Finance - - - Insurance
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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