TY  - JOUR
AU  - Coile,Courtney
AU  - Milligan,Kevin
TI  - How Household Portfolios Evolve After Retirement: The Effect of Aging and Health Shocks
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12391
PY  - 2006
Y2  - July 2006
UR  - http://www.nber.org/papers/w12391
L1  - http://www.nber.org/papers/w12391.pdf
N1  - Author contact info:
Courtney Coile
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA  02481
Tel: 781/283-2408
Fax: 781/283-2177
E-Mail: ccoile@wellesley.edu

Kevin S. Milligan
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-6747
Fax: 604/822-5915
E-Mail: kevin.milligan@ubc.ca
M2  - featured in NBER digest on 2006-07-31
AB  - In this paper, we study how the portfolios of elderly U.S. households evolve after retirement, using data from the Health and Retirement Study (HRS).  In particular, we investigate the influence of aging and health shocks on a household%u2019s ownership of various assets and on the dollar value and share of total assets held in each asset class.  We find that households decrease their ownership of most asset classes as they age, with the strongest evidence for principal residences and vehicles, while increasing the share of assets held in bank accounts and CDs.  Consistent with prior studies, we find that the death of a spouse is a strong predictor of selling the principal residence.  However, we find that widowhood also leads households to sell vehicles, businesses, and real estate and to put money into bank accounts and CDs, and further that other health shocks have very similar impacts.  Finally, we explore why health shocks affect asset holdings and find that the effect of a shock is greatly magnified when households have physical or mental impairments.  This suggests that factors other than standard risk and return considerations may weigh heavily in many older households%u2019 portfolio decisions.
ER  -