How portfolios evolve after retirementThe effect of health shocks

How portfolios evolve after retirement

The effect of health shocks

Coile

Courtney

Coile, Courtney

Author

Milligan

Kevin

Milligan, Kevin

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20052005monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2005

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

We study the household portfolios of the elderly using data from the Health and Retirement Study. In particular, we investigate the influence of aging and health shocks on both a household's ownership of various assets and the dollar value and share of total assets held in each asset class. We find that households decrease their ownership of most asset classes as they age, with the strongest evidence for principal residences and vehicles. Using several types of health shocks, we proceed to relate the observed asset changes to the onset of different health problems. Consistent with the previous literature, we find that the death of a spouse is a strong predictor of selling the principal residence. However, we find that more subtle health shocks have equally strong, although more gradual, impacts on the asset choices of the elderly. These findings help us to understand the methods by which and extent to which households are able to self-insure against some of the risks of old age.

Courtney Coile and Kevin Milligan.

CRR WP2005-17

CRR WP

2005-17

http://crr.bc.edu/images/stories/Working_Papers/WP_2005-17.pdf

MChBEnglisheng

MChB

Englisheng

English

eng