Life Expectancy and Old Age Savings

Mariacristina De Nardi, Eric French, and John Bailey Jones (2009) - Life Expectancy and Old Age Savings, Federal Reserve Bank of Chicago, REVISED January 9, 2009 WP 2008-18

Rich people, women, and healthy people live longer. We document that this hetero- geneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly’s saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one’s expected lifespan has a large effect on the elderly’s saving behavior.