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Medical Spending, Bequests, and Asset Dynamics around the Time of Death

Author

Listed:
  • Mariacristina De Nardi
  • Eric French
  • John Bailey Jones
  • Rory McGee
  • Rachel Rodgers
Abstract
Using data from the Health and Retirement Survey, we document the changes in assets that occur before a person's death. Applying an event study approach, we find that during the six years preceding their deaths, the assets of single decedents decline, relative to those of similar single survivors, by an additional $20,000 on average. Over the same time span, the assets of couples who lose a spouse fall, relative to those of similar surviving couples, by an additional $90,000 on average. Households experiencing a death also incur higher out-of-pocket medical spending and other end-of-life expenses. This elevated spending is sufficient to explain (in accounting terms) the asset declines observed for singles but falls short of explaining the declines observed for couples. Bequests from the dying spouse to nonspousal heirs, such as children, are more than sufficient to explain the remainder.

Suggested Citation

  • Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee & Rachel Rodgers, 2020. "Medical Spending, Bequests, and Asset Dynamics around the Time of Death," Econ Focus, Federal Reserve Bank of Richmond, vol. 4, pages 135-157.
    • Handle: RePEc:fip:fedrrf:92735
    DOI: 10.21144/eq1060401
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    Cited by:

    1. d’Albis, Hippolyte & El Mekkaoui, Najat & Legendre, Bérangère, 2023. "Health accidents and wealth decline in old age," Social Science & Medicine, Elsevier, vol. 332(C).
    2. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee, 2021. "Why Do Couples and Singles Save During Retirement?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 21(09), pages 1-65, May.
    3. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee, 2021. "Why Do Couples and Singles Save during Retirement? Household Heterogeneity and its Aggregate Implications," NBER Working Papers 28828, National Bureau of Economic Research, Inc.
    4. St-Amour, Pascal, 2024. "Valuing life over the life cycle," Journal of Health Economics, Elsevier, vol. 93(C).
    5. Bonekamp, Johan & Wouterse, Bram, 2023. "Do different shocks in health matter for wealth?," Journal of Health Economics, Elsevier, vol. 87(C).
    6. Yang, Siqiang & Ripoll, Marla, 2023. "Financial transfers from parents to adult children," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 286-303.
    7. David Sturrock & Stefan Groot & Jan Möhlmann, 2022. "Wealth, gifts, and estate planning at the end of life," CPB Discussion Paper 442, CPB Netherlands Bureau for Economic Policy Analysis.

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    More about this item

    Keywords

    Health; Retirement; Death;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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