The Drawdown of Assets during Retirement: Evidence from Sweden

Martin Ljunge, Lee Lockwood, Day Manoli

NBER Retirement Research Center Paper No. NB 13-03
Issued in November 2013

In this paper, we analyze the evolution of wealth during retirement in Sweden. Because of the generous social insurance system that reduces the need for saving for health expenditures relative to the United States, Sweden provides an interesting environment to study wealth dynamics. Following an empirical analysis similar to Poterba, Venti and Wise (2011), we document several major patterns about how wealth evolves during retirement. Our particular focus is on learning about the effects of changes in household composition – from spousal death and divorce – on the evolution of wealth during retirement. Our results indicate that spousal death is associated with more modest declines in assets in Sweden than in the US. Nevertheless, the results also indicate that Swedish retirees are not completely insulated from the financial consequences of health shocks, as spousal death is associated with non‐negligible declines in household wealth.

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Acknowledgments