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Retirement Date Effects on Pre-Retirement Wealth Accumulation: An Analysis of US Households

This paper uses seven waves of data from the US Health and Retirement Study to investigate the impact of expectations regarding the timing of retirement on pre-retirement wealth accumulation. More specifically, we analyze the effect of the individual’s subjective belief that he will work full time after age 62 on his current level of wealth. We use the individual’s perception of the usual retirement age on the job as an instrument for his subjective belief that he will work full time after age 62. We look at single women, single men and married individuals separately. On a whole, the point estimates suggest that the responsiveness of individuals saving behaviour to retirement dates expectations is large. A ten percent-age point increase in the subjective probability of working past age 62 results in a decrease in household wealth well in excess of 20% for most demographic groups. In addition, we find that, in the case of married couples in particular, there is a threshold effect in this response.

Working Paper 266
1 February 2012
SHARE THIS Working Paper PUBLICATION:
25 September 2012
Publication Type: Working Paper
JEL Code: E21, J26

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