Old Age Savings and House Price Shocks


Retirees maintain large wealth holdings, hold the majority of housing, and often leave bequests. How do house price fluctuations affect retirees’ savings? Informed by evidence from a natural experiment, I estimate a model of savings decisions including housing and bequest preference heterogeneity. I disentangle precautionary savings, bequest motives, and the desire to remain in one’s home utilizing variation in housing and bequest taxation. 1/4 of house price increases are passed on to future generations, despite 50% of retirees having zero estimated bequest motive. I evaluate means-tested Long Term Care programs finding providing marginal liquidity delivers large benefits per pound spent.


If you have any questions regarding the seminar, please contact the seminar organizers Richard Audoly or Tone Solheim.