Saving and wealth holdings of the elderly

Abstract

Using panel data for the Netherlands, we find that wealth holdings of the elderly are very unevenly distributed. Furthermore, the inequality increases with age, which indicates different rates of accumulation (or decumulation) across wealth levels. This divergence in behaviour depending on wealth holdings points to a strong bequest motive. The presence of a bequest motive is confirmed by subjective information obtained from a new and unique panel, the VSB-panel, that we exploit. For most elderly the level of assets is so low that it probably mainly serves to satisfy a precautionary motive. Subjective information in the VSB-panel shows that precautionary motives are indeed quite strong among the elderly. For the vast majority of the elderly social security and pensions are absolutely essential to maintain a decent standard of living.