Old-age saving in a welfare state

We contribute to the literature on saving in retirement by studying the saving behavior of retirees in Iceland, a country where health care and nursing homes ares free of charge. This removes some of the precautionary motive for saving, leaving the bequest motive and other inter-generational transfers, which are the focus of our study. It is shown that saving remains positive in retirement and depends on having children, their income, and their saving. The saving rate drops upon the death of a spouse indicating a transfer of wealth to children.