This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Macroeconomics
  4. Forthcoming Articles
  5. Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden

Medical Expenses and Saving in Retirement: The Case of U.S. and Sweden

  • Makoto Nakajima
  • Irina A. Telyukova
American Economic Journal: Macroeconomics (Forthcoming)

Abstract

Many U.S. households have significant wealth late in life, contrary to the predictions of a simple life-cycle model. By comparison, retirees in Sweden decumulate wealth more quickly while facing smaller out-of-pocket medical expense risks late in life. In this paper, we investigate how well the latter can account for the former, using a full life-cycle consumption-saving model. We find that medical expense level and risk account for 32-59% of the U.S.-Sweden difference in retirees’ speed of wealth decumulation, depending on age. We also show that financing and coverage of health insurance affect wealth decumulation patterns in retirement.

Downloads