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Wealth Accumulation of US Households: What Do We Learn from the SIPP Data?

By Vincent Hildebrand

Abstract

In this paper, I estimate, for US households, age-wealth profiles which allow for cohort effects. I use these to reexamine one of the central empirical propositions of simple life-cycle models: dissaving after retirement. The analysis employs a data set which has not been previously examined in this way: the Survey of Income and Program Participation (SIPP). The main regression results suggest that elderly households do not dissave after retirement. However, an examination of the distribution of wealth at retirement reveals that most households have accumulated very little wealth from which to dissave. Given that about 40% of households are not covered by any occupational pension, social security payments are the main source of retirement income for a large number of households. Even more than the absence of post-retirement dissaving, it is this overall lack of pre-retirement saving which seems to contradict life-cycle models.wealth accumulation, life cycle models, cohort analysis

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