Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden

Nakajima, Makoto; Telyukova, Irina A.

doi:10.21034/iwp.8

Cited by 13 publications

(15 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This analysis underscores our finding that housing wealth is important to consider, separately from financial wealth, in order to understand dissaving in retirement, and further, that it is the change in homeownership rates, rather than the decline of housing wealth per se, that is important. These results echo our previous work in Nakajima and Telyukova (2013). In that study, we show in the context of the U.S. that a life-cycle model of retirement needs to account for homeownership and its change with age, in order to be successful in accounting for the retirement saving puzzle.…”

Section: Dissaving In Retirement: Further Analysissupporting

confidence: 88%

Housing and Saving in Retirement Across Countries

Nakajima

Telyukova

2016

Contemporary Issues in Microeconomics

Self Cite

View full text Add to dashboard Cite

The so-called "retirement saving puzzle" is the phenomenon that many households in the U.S. have significant wealth late in life, contrary to the predictions of a deterministic life-cycle model. In this project, we collect facts on crosscountry differences in saving behavior of retirees, in order to weigh in on the discussion of the puzzle. First, we find that countries in our sample vary noticeably in the extent of the puzzle: one group of countires, in South and Central Europe, look like the U.S., while in another group, in Northern Europe, retirees spend down their wealth much more rapidly. Second, we show that in order to understand the rates of dissaving across countries, one needs to understand differences in housing assets, as housing constitutes the majority of wealth for a median retiree in many countries, and dissaving in housing is highly correlated with overall dissaving. Finally, we examine institutional differences and differences in risks between countries, based on the literature as well as measurement from our data, where possible. These provide a number of promising explanations that should be examined in future research.

show abstract

Section: Dissaving In Retirement: Further Analysissupporting

confidence: 88%

Housing and Saving in Retirement Across Countries

Nakajima

Telyukova

2016

Contemporary Issues in Microeconomics

Self Cite

View full text Add to dashboard Cite

show abstract

“…There is a recent literature that uses cross‐country comparison of asset decumulation patterns to shed further light on the key drivers of saving behavior in retirement. Nakajima and Telyukova () compare asset decumulation in retirement in European countries and the U.S. Nakajima and Telyukova () focus on the differences between the U.S. and Sweden to infer the importance of medical expense risk in shaping retirees' wealth decumulation patterns. Blundell et al.…”

Section: Related Literaturementioning

confidence: 99%

“…Thus, future research will need additional strategies for identification, which may involve, for example, more detailed modeling of bequests, or the use of data from multiple countries, or both. Nakajima and Telyukova () take a step in that direction.…”

Section: Identification and Sensitivitymentioning

confidence: 99%

Home Equity in Retirement

Nakajima

Telyukova

2020

Int Economic Review

Self Cite

View full text Add to dashboard Cite

Retired homeowners dissave more slowly than renters, which suggests that homeownership affects retirees' saving decisions. We investigate empirically and theoretically the life-cycle patterns of homeownership, housing, and nonhousing assets in retirement. Using an estimated structural model of saving and housing decisions, we find first that homeowners dissave slowly because they prefer to stay in their house as long as possible but cannot easily borrow against it. Second, the 1996-2006 housing boom significantly increased homeowners' assets. These channels are quantitatively significant; without considering homeownership, retirees' net worth would be 28%-44% lower, depending on age.

show abstract

“…These potential expenses include both out-of-pocket (insurance deductibles) and nursing home care. Nakajima and Telyukova (2015) find in a cross-country study of the USA and Sweden that medical expenses are an important factor influencing seniors’ wealth accumulation, particularly in the USA where out-of-pocket expenses are greater. However, they find the impact is limited to financial asset accumulation, and they conclude “housing is not a precautionary asset and that retirees stay in their homes late in life for reasons other than OOP (out-of-pocket) medical spending”.…”

Section: Life-cycle Hypothesismentioning

confidence: 99%

International perspectives on homeownership and home equity extraction by senior households

Haurin

Moulton

2017

JERER

View full text Add to dashboard Cite

Purpose This paper links the literatures on the life-cycle hypothesis, homeownership, home equity and pensions. Empirically, the focus is on the EU and USA. The paper aims to explore the extent that seniors extract their home equity and discuss the financial instruments available for equity extraction. Design/methodology/approach The study uses data from the EU and USA to determine homeownership rates, house values and mortgage debt. With these values, the amount of seniors’ home equity is measured for each country. The usage of home equity extraction methods is reported and factors limiting their use are identified. Findings Seniors’ home equity is a substantial share of their total wealth. Estimates for 2013 are that their home equity equals about €5tn in the USA and over €8tn in large EU countries. The authors find that only a small share of seniors extracts their home equity. While there are supply side constraints in many countries, the evidence suggests that the cause of low extraction rates is the lack of demand. Various reasons for the lack of demand are discussed. Practical implications The increasing share of seniors in most countries’ population suggests that there will be increasing pressure on public pension systems. One among many options to address this issue is to impose a wealth test for eligibility, where wealth includes home equity. This study suggests that although home equity is substantial for many seniors, they are reluctant to access the funds. Originality/value The paper highlights the importance of home equity in the EU and USA and the factors that affect the primary methods of extraction.

show abstract

Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden

Cited by 13 publications

References 18 publications

Housing and Saving in Retirement Across Countries

Housing and Saving in Retirement Across Countries

Home Equity in Retirement

International perspectives on homeownership and home equity extraction by senior households

Contact Info

Product

Resources

About