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How Portfolios Evolve After Retirement: The Effect of Health Shocks

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  • Courtney C. Coile
  • Kevin Milligan

Abstract

We study the household portfolios of the elderly using data from the Health and Retirement Study. In particular, we investigate the influence of aging and health shocks on both a household’s ownership of various assets and 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. Using several types of health shocks, we proceed to relate the observed asset changes to the onset of different health problems. Consistent with the previous literature, we find that the death of a spouse is a strong predictor of selling the principal residence. However, we find that more subtle health shocks have equally strong, although more gradual, impacts on the asset choices of the elderly. These findings help us to understand the methods by which and extent to which households are able to self-insure against some of the risks of old age.

Suggested Citation

  • Courtney C. Coile & Kevin Milligan, 2005. "How Portfolios Evolve After Retirement: The Effect of Health Shocks," Working Papers, Center for Retirement Research at Boston College wp2005-17, Center for Retirement Research, revised Dec 2005.
    • Handle: RePEc:crr:crrwps:wp2005-17
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    File URL: http://crr.bc.edu/working-papers/how-portfolios-evolve-after-retirement-the-effect-of-health-shocks/
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    Cited by:

    1. Datta Gupta, Nabanita & Larsen, Mona, 2007. "Health Shocks and Retirement: The Role of Welfare State Institutions," MPRA Paper 15497, University Library of Munich, Germany.
    2. Jody Schimmel & David C. Stapleton, 2010. "Protecting the Household Incomes of Older Workers with Significant Health-Related Work Limitations in an Era of Fiscal Responsibility," Working Papers wp244, University of Michigan, Michigan Retirement Research Center.

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