This paper studies the quantitative importance of precautionary wealth accumulation relative to life-cycle saving for retirement. Section 1 examines panel data on earnings from the PSID. Using a bivariate normal model of random effects, we find that second-period-of-life earnings are strongly...

We introduce a tractable model of post-retirement saving behavior in which households have a precautionary motive arising from uninsured health status risks. The model distinguishes between annuitized and non-annuitized wealth, emphasizes the importance of asset composition in determining...

Two of the most basic frameworks which economists use for analyzing national saving and private wealth accumulation are the life-cycle model (e.g., Modigliani [1986]) and the so-called altruistic or dynastic model (e.g., Barro [1974] and Becker [1974]). In the first, households care about their...

We introduce a tractable model of post-retirement saving behavior in which households have a precautionary motive arising from uninsured health status risks. The model distinguishes between annuitized and non-annuitized wealth, emphasizes the importance of asset composition in determining...

Data suggest the distribution of wealth among households in the United States and the United Kingdom has become more equal over the last century - though the pattern may have reversed recently. This paper shows that a model in which all households save for life-cycle reasons and some for...