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Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership

Author

Listed:
  • Charles Yuji Horioka
  • Luigi Ventura

Abstract

In this paper, we use micro data on a large number of European countries from the Survey of Health, Ageing and Retirement in Europe (SHARE) to examine the wealth accumulation (saving) behavior of the retired elderly in Europe. To summarize our main findings, we find that less than half of the retired elderly in Europe are decumulating their wealth and that the average wealth accumulation rate of the retired elderly in Europe is positive though relatively moderate (6.6% over a 3-year period). These findings strongly suggest that the Wealth Decumulation (or Retirement Saving) Puzzle (the tendency of the retired elderly to not decumulate their wealth or to decumulate their wealth more slowly than expected) applies in the case of Europe. Moreover, our regression results suggest that bequest motives, generous public pension systems, and the reluctance of retired elderly homeowners to sell or borrow against their owner-occupied housing are the primary explanations for the existence of the Wealth Decumulation Puzzle in Europe.

Suggested Citation

  • Charles Yuji Horioka & Luigi Ventura, 2022. "Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership," NBER Working Papers 30470, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30470
    Note: AG EFG PE
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    Citations

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    Cited by:

    1. Charles Yuji Horioka, 2024. "Household Saving in Japan: The Past, Present, and Future," ISER Discussion Paper 1264r, Institute of Social and Economic Research, The University of Osaka, revised Jan 2026.
    2. Puonti, Päivi, 2023. "Effective Fiscal Policy in an Aging Economy: Evidence from a BVAR Analysis," ETLA Working Papers 110, The Research Institute of the Finnish Economy.
    3. Charles Yuji Horioka, 2025. "Bequests," NBER Working Papers 33927, National Bureau of Economic Research, Inc.
    4. Ilari Ilmakunnas & Joonas Uotinen & Maria Vaalavuo, 2024. "Association Between Age and Subjective Economic Hardship Across the Income Distribution in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 173(2), pages 523-542, June.
    5. Charles Yuji Horioka, 2026. "The Impact of Population Aging on the Household Saving Rate: The Case of Japan," ISER Discussion Paper 1301, Institute of Social and Economic Research, The University of Osaka.
    6. Roth, Steve & Bezemer, Dirk, 2024. "How Invisible Capital Gains Drive Extreme Wealth Concentration: Evidence from Balance-Sheet-Complete Haig-Simons Accounting," MPRA Paper 125174, University Library of Munich, Germany.
    7. Javier Olivera & Jan De Mulder, 2025. "Ageing and the distribution of wealth in Europe," Working Papers 685, ECINEQ, Society for the Study of Economic Inequality.
    8. Li, Jingrong & Mi, Xinyu & Zhang, Chenlei & Qin, Yanran, 2024. "Social pension insurance and household risky asset investment: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 219-233.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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