Uncertain health and survival, effects on the savings of retired couples

by Lee A. Lillard, Yorem Weiss


Purchase Print Copy

 FormatList Price
Add to Cart Paperback69 pages Free

The analysis of this paper focuses on the impact of health and survival uncertainty on the saving and consumption decisions of retirees. The decision unit which the authors investigate is a husband-wife household which pools the resources of its surviving members. If one spouse dies, his partner gets the remaining assets; and if both die, the remaining assets are left as bequests. The health and survival status of both partners affects the asset accumulation path. The authors use a dynamic programming approach to model the household's planning problem. The data used for the estimation is the Longitudinal Retirement History Survey which followed individuals aged 58-63 in 1969 for a period of ten years. Compared with the existing literature, this paper is distinguished in its emphasis on health and in its explicit treatment of the household.

This report is part of the RAND Corporation Draft series. The unrestricted draft was a product of the RAND Corporation from 1993 to 2003 that represented preliminary or prepublication versions of other more formal RAND products for distribution to appropriate external audiences. The draft could be considered similar to an academic discussion paper. Although unrestricted drafts had been approved for circulation, they were not usually formally edited or peer reviewed.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/research-integrity.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.