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Wealth Inequality Among Older Americans

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  • James P. Smith

    (RAND)

Abstract

Using the AHEAD study, this article examines the wealth distribution among American househods with a member at least 70 years old. Household wealth is quite unevenly distributed among older American households. Those households in the top 10th percentile of the wealth distribution have 2,500 times as much wealth as those at the lowest 10th percent. This sharp wealth disparity relative to income dispersion is the dominant reason why older minority households have accumulated so little wealth compared to White households. Wealth varies by a factor of seven to one when both spouses are in poor health compared to when they say that they are in excellent health. Finally, AHEAD data on bequest intentions suggest a bifurcated bequest motive. Most older households plan to bequeath a modest financial inheritance, but about one-quarter expect to leave inheritances worth $100,000 or more.

Suggested Citation

  • James P. Smith, 2004. "Wealth Inequality Among Older Americans," Labor and Demography 0403003, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0403003 Note: Type of Document - pdf; pages: 8. The Journals of Gerontology, Volume 52B, May 1997, pp. 74-81
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    File URL: http://econwpa.repec.org/eps/lab/papers/0403/0403003.pdf
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    References listed on IDEAS

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    1. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-489, October.
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    Cited by:

    1. Kanika Kapur & Jeannette A. Rogowski & Vicki A. Freedman & Steven L. wickstrom & John L. Adams & Jose J. Escarce, 2004. "Socioeconomic Status and Medical Care Expenditures in Medicare Managed Care," NBER Working Papers 10757, National Bureau of Economic Research, Inc.
    2. Erik Hurst, 2004. "Grasshoppers, Ants and Pre-Retirement Wealth: A Test of Permanent Income Consumers," Working Papers wp088, University of Michigan, Michigan Retirement Research Center.
    3. Douglas Holtz-Eakin & John W. R. Phillips & Harvey S. Rosen, 2001. "Estate Taxes, Life Insurance, And Small Business," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 52-63, February.
    4. Michael Hurd & Julie Zissimopoulos, 2003. "Saving for Retirement: Wage Growth and Unexpected Events," Working Papers wp045, University of Michigan, Michigan Retirement Research Center.
    5. Erik Hurst, 2003. "Grasshoppers, Ants, and Pre-Retirement Wealth: A Test of Permanent Income," NBER Working Papers 10098, National Bureau of Economic Research, Inc.
    6. Yoon Lee & Jean Lown & Deanna Sharpe, 2007. "Predictors of Holding Consumer and Mortgage Debt among Older Americans," Journal of Family and Economic Issues, Springer, vol. 28(2), pages 305-320, June.
    7. James P. Smith, 1997. "The Changing Economic Circumstances of the Elderly: Income, Wealth, and Social Security," Center for Policy Research Policy Briefs 8, Center for Policy Research, Maxwell School, Syracuse University.
    8. Florian Heiss & Michael Hurd & Axel Borsch-Supan, 2003. "Healthy, Wealthy, and Knowing Where to Live: Predicted Trajectories of Health, Wealth and Living Arrangements Among the Oldest Old," NBER Working Papers 9897, National Bureau of Economic Research, Inc.

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    JEL classification:

    • J - Labor and Demographic Economics

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