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Why Do People Save During Retirement?, No. 21-32

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Why Do People Save During Retirement?, No. 21-32

DATE: September 2021

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ABSTRACT: Economic theory predicts that people will accumulate savings during their working years and deplete those savings during retirement in order to smooth consumption over their lifetime. But retired singles tend to deplete their assets very slowly, and retired couples tend to accumulate assets as they age. Research points to two reasons why households are slow to decumulate their assets: (i) the need to prepare for uncertain end-of-life medical expenses and (ii) the desire to bequeath assets to surviving family members after death. This Economic Brief shows that the interaction between these two motives is a crucial determinant of saving behavior for all retirees.

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De Nardi, Mariacristina , French, Eric (Eric Baird) , Jones, John Bailey , McGee, Rory , Sablik, Timothy and Federal Reserve Bank of Richmond. "Why Do People Save During Retirement?, No. 21-32," Economic Brief (September 2021). https://fraser.stlouisfed.org/title/6034/item/607768, accessed on March 20, 2023.

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