Asset Rundown After Retirement: The Importance of Rate of Return Shocks

19 Pages Posted: 9 May 2007

See all articles by Eric French

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

Phil Doctor

Federal Reserve Bank of Chicago

Oleysa Baker

Federal Reserve Bank of Chicago

Abstract

The authors provide evidence that households run down their assets after retirement by tracking a group of elderly households over the 1996-2004 period. They find that assets decline for these households approaching the end of the life cycle. Had there not been a run-up in asset prices due in large part to a historically remarkable rise in housing prices, assets would have declined even faster.

Keywords: asset decumulation, aging, rate of return shocks, Consumption, Saving, Wealth, Personal Income and Other Nonbusiness Taxes and Subsidies

Suggested Citation

French, Eric and Doctor, Phil and Baker, Oleysa, Asset Rundown After Retirement: The Importance of Rate of Return Shocks. Economic Perspectives, Vol. 31, No. 2, Second Quarter 2007, Available at SSRN: https://ssrn.com/abstract=984942

Eric French (Contact Author)

Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Phil Doctor

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Oleysa Baker

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

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