Just looked through
Saving Preferences After Retirement, Garcia et. al 80 p May 2018. Not a ton of surprise. Here are some excerpts:
- Recent
empirical studies in the United States,
the Netherlands
and Australia
have shown
that retirees do not draw down their wealth during retirement,
contradicting the theoretical
predictions of the standard life cycle model.
- It
appears that changing liquidity (the income and wealth combination)
affects the advised consumption pattern in both countries. Dutch
participants become less conservative (i.e., more often advise a high
spending pattern) if their pension wealth is more liquid than in the
actual Dutch pension system. Accordingly, Australian participants would
become more conservative in a setting with lower availability of wealth
and higher annuity income than in their actual institutional setting.
- Our
results show that expected major health or mortality events have an impact
on the advised spending pattern and saving motives. Not surprisingly,
expecting a health shock in the near future is associated with an
increasing importance of the precautionary health motive, particularly for
the high liquidity of wealth vignette. Similarly, an expectation that one
of the household members dies within 10 years after retirement
significantly affects the importance of the intra-household bequest and
the security motive, irrespective of the liquidity setting. Overall, the
results suggest that the liquidity of pension wealth, as a proxy for the
institutional setting, does not seem to contribute substantively to the
importance of saving motives at the start of retirement.
- From a
policy perspective, our results suggest that the availability of liquid
pension wealth, our proxy for the institutional setting, has a limited
influence on advised spending patterns or the ranking of the saving motives.
Higher liquidity of wealth implies higher spending and less emphasis on
the precautionary saving motive, but the effect is too small to explain
the difference between the Netherlands
and Australia.
This may mean that, at least in the short run, individuals do not respond
as expected to changes in the liquidity of wealth at the start of
retirement
- Furthermore,
the large differences explained by differences in individual
characteristics suggest that a medium to high annuitisation rate with
limited choice might be desirable from a policy perspective in order to
accommodate for the observed heterogeneity and to protect individuals from
suboptimal decisions. [my wariness meter reads high here]
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