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We use administrative data for Norway to estimate an incomplete-market life-cycle model of retired singles and couples with a bequest motive, health-dependent utility, and uncertain longevity and health. We allow the parameters of the bequest utility to differ between households with and without offspring. Our estimates imply a very strong utility of residual wealth (bequest motive), in line with the estimates by Lockwood (2018). The bequest motive accounts for approximately three-quarters of aggregate wealth at age 85. More surprisingly, we estimate similar utility of residual wealth for households with and without offspring. We interpret this as, prima facie, evidence that the utility of residual wealth represents forces beyond an altruistic bequest motive.
Authors
Research Associate Queen Mary, University of London
Giulio is a Research Associate of the IFS and a Professor in the School of Economics and Finance at Queen Mary University of London since 2017.
Assistant Professor University of Oslo
Senior Economist Bank of Canada
Working Paper details
- DOI
- 10.1920/wp.ifs.2024.0224
- Publisher
- Institute for Fiscal Studies
Suggested citation
G, Fella and M, Holm and T, Pugh. (2024). Saving after retirement and preferences for residual wealth. 24/02. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/saving-after-retirement-and-preferences-residual-wealth (accessed: 19 May 2024).
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