Abstract
The so-called retirement-savings puzzle is a phenomenon by which, contrary to what the standard life-cycle model predicts, households do not run down their wealth significantly during retirement. In this review paper, we survey the literature on the retirement-savings puzzle and we connect it with the literature on housing equity during retirement. To establish a link between these two streams of literature, we use as a framework the work of Nakajima and Telyukova (2013a, Home equity in retirement, UCSD Working Paper) and Nakajima and Telyukova (2017, Reverse mortgage loans: a quantitative analysis, Journal of Finance 72: 911-950), who find that home-ownership interacts with factors that explain the retirement-savings puzzle, notably with the bequest motive. We complement the results by Nakajima and Telyukova by relating them to the literature on altruistic bequests, strategic bequests and housing as a commitment device, all of which give further insights on the connection between home-ownership and bequests. We complement our review of the literature with descriptive evidence using the Netherlands as a case study.
| Original language | English |
|---|---|
| Pages (from-to) | 195-225 |
| Number of pages | 31 |
| Journal | Journal of Economic Surveys |
| Volume | 33 |
| Issue number | 1 |
| Early online date | 25-Jan-2018 |
| DOIs | |
| Publication status | Published - Feb-2019 |
Keywords
- Altruistic bequests
- Bequest motive
- Commitment
- Housing
- Retirement
- Savings
- Strategic bequests
- INTER-VIVOS TRANSFERS
- LONGEVITY RISK
- LIFE-CYCLE
- ALTRUISM
- WEALTH
- TIME
- MOTIVES
- LOVE
- CARE