Comparing Retirement Wealth Trajectories on Both Sides of the Pond

Abstract

We use comparable data from the U.S. and England to examine similarities and differences in the level and trajectories of assets among households age 70 and older. We find that in the U.S. assets on average decline gradually with age, while in England older households actually accumulate wealth. These differences appear to be driven largely, though not entirely, by housing wealth: During the period we consider, house price growth drove increases in housing wealth in England that more than offset the slow drawdown of nonhousing wealth. This suggests the illiquid nature of housing is likely to be an important factor in explaining wealth drawdown at older ages. We also consider the potential importance of bequest motives and savings to insure against the risk of medical and long-term care expenses.