Why Do Couples and Singles Save During Retirement?

68 Pages Posted: 14 May 2021 Last revised: 14 Jul 2021

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

University College London, Economics Dpt.; Federal Reserve Bank of Chicago; National Bureau of Economic Research (NBER) - Public Economics

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

John Bailey Jones

Federal Reserve Bank of Richmond; SUNY at Albany - School of Business

Rory McGee

University College London - Drayton House

Multiple version iconThere are 2 versions of this paper

Date Written: May 2021

Abstract

While the savings of retired singles tend to fall with age, those of retired couples tend to rise. We estimate a rich model of retired singles and couples with bequest motives and uncertain longevity and medical expenses. Our estimates imply that while medical expenses are an important driver of the savings of middle-income singles, bequest motives matter for couples and high-income singles, and generate transfers to non-spousal heirs whenever a household member dies. The interaction of medical expenses and bequest motives is a crucial determinant of savings for all retirees. Hence, to understand savings, it is important to model household structure, medical expenses, and bequest motives.

Suggested Citation

De Nardi, Mariacristina and French, Eric and Jones, John B. and McGee, Rory, Why Do Couples and Singles Save During Retirement? (May 2021). CEPR Discussion Paper No. DP16155, Available at SSRN: https://ssrn.com/abstract=3846292

Mariacristina De Nardi (Contact Author)

University College London, Economics Dpt. ( email )

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Eric French

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John B. Jones

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Rory McGee

University College London - Drayton House ( email )

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