Saving Preferences After Retirement

42 Pages Posted: 13 Jun 2018 Last revised: 3 May 2022

See all articles by Jennifer Alonso-García

Jennifer Alonso-García

Université Libre de Bruxelles (ULB) - Department of Mathematics; Netspar

Hazel Bateman

UNSW Sydney, CEPAR

Johan Bonekamp

AFM (Dutch Authority for the Financial Markets)

Arthur van Soest

Tilburg University

Ralph Stevens

CPB Netherlands Bureau of Economic Policy Analysis; CEPAR

Date Written: April 30, 2022

Abstract

We investigate the importance of alternative motives for saving and spending patterns after retirement in the Netherlands and Australia. Using an online experimental survey, we elicit the impact on advised spending patterns and underlying saving motives of alternative retirement drawdown designs, ranging from complete flexibility in Australia to full annuitization in the Netherlands, and of major life events such as becoming frail or losing a spouse. We find that important motives for spending and saving after retirement in both countries are the desire to remain financially independent and to ensure that it is possible to enjoy life now as well as later. However, consistent with differences in real world pension settings, life span risk is more important and liquidity less important in Australia than in the Netherlands. With the exception of inter vivos transfers to a surviving spouse, the bequest motive is not important in either country. Our results suggest that an important reason for the widespread behaviour of retirees to hold on to their wealth might be the desire to hold precautionary savings for health and long-term care expenditures. We also find that individuals revise their saving motives in anticipation of major life events but are less responsive to variation in ‘experimental’ retirement drawdown arrangements, remaining aligned to the prevailing institutional arrangements in their country.

Keywords: saving motives, asset decumulation, pension design, consumption smoothing

JEL Classification: J14, J26, D14, D31

Suggested Citation

Alonso-García, Jennifer and Bateman, Hazel and Bonekamp, Johannes and van Soest, Arthur and Stevens, Ralph, Saving Preferences After Retirement (April 30, 2022). Journal of Economic Behavior and Organization, 198, 409-433, Available at SSRN: https://ssrn.com/abstract=3184043 or http://dx.doi.org/10.2139/ssrn.3184043

Jennifer Alonso-García (Contact Author)

Université Libre de Bruxelles (ULB) - Department of Mathematics ( email )

Brussels
Belgium

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Hazel Bateman

UNSW Sydney, CEPAR ( email )

High Street
Sydney, NSW 2052
Australia

Johannes Bonekamp

AFM (Dutch Authority for the Financial Markets)

Vijzelgracht
50
Amsterdam, Noord-Holland 1017 HS
Netherlands

Arthur Van Soest

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Ralph Stevens

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

HOME PAGE: http://https://www.cpb.nl/medewerkers/ralph-stevens

CEPAR ( email )

Sydney, NSW 2052
Australia
+61 2 9385 1883 (Fax)

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