RIEB Discussion Paper Series No.2020-16

RIEB Discussion Paper Series No.2020-16

Title

The Wealth Decumulation Behavior of the Retired Elderly in Italy: The Importance of Bequest Motives and Precautionary Saving

Abstract

In this paper, we analyze the wealth accumulation and saving behavior of the retired elderly in Italy using micro data from the "Survey of Italian Households' Income and Wealth," a panel survey of households conducted every two years by the Bank of Italy. We find that, on average, the retired elderly in Italy are decumulating their wealth (dissaving) but that their wealth decumulation rates are much slower than expected. Moreover, we also find that more than 40 percent of the retired elderly in Italy are continuing to accumulate wealth and that more than 80 percent are doing positive amounts of saving. Thus, the Wealth Decumulation Puzzle (the tendency of the retired elderly to decumulate their wealth more slowly than expected) appears to apply in the case of Italy, as it does in most other countries, before as well as after the Global Financial Crisis. Moreover, our regression analysis of the determinants of the wealth accumulation and saving behavior of the retired elderly in Italy suggests that the lower than expected wealth decumulation rates and dissaving of the retired elderly in Italy is due largely to bequest motives and saving for precautionary purposes, especially the former.

Keywords

Aged; Bequests; Bequest intentions; Bequest motive; Elderly; Household saving; Italy; Inheritances; Intergenerational transfers; Life cycle hypothesis; Life cycle model; Precautionary saving; Retired elderly; Saving; Wealth; Wealth accumulation; Wealth decumulation; Wealth decumulation puzzle

JEL Classification

D12, D14, D15, D64, E21, J14

Inquiries

Luigi VENTURA
Department of Economics and Law, Sapienza University of Rome

Charles Yuji HORIOKA
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059
Asian Growth Research Institute
Institute of Social and Economic Research, Osaka University
National Bureau of Economic Research

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