On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates
Federal Reserve Bank of Minneapolis, Opportunity and Inclusive Growth Institute
Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden
Many U.S. households have significant wealth late in life, contrary to the predictions of a simple life-cycle model. In this paper, we document stark differences between U.S. and Sweden regarding out-of-pocket medical and long-term-care expenses late in life, and use them to investigate their role in discouraging the elderly from dissaving. Using a consumption-saving model in retirement with significant uninsurable expense risk, we find that medical expense risk accounts for a quarter of the U.S.-Sweden difference in retirees' dissaving patterns. Furthermore, medical expense risk affects primarily financial assets, while its impact on housing is limited.
Cite this item
Makoto Nakajima & Irina A. Telyukova, Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden, Federal Reserve Bank of Minneapolis, Opportunity and Inclusive Growth Institute, Working Papers 8, 10 Apr 2018.
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
Keywords: Household finance; Aging; Retirement saving; Health; Cross-country analysis
This item with handle RePEc:fip:fedmoi:0008
is also listed on EconPapers
For corrections, contact Jannelle Ruswick ()