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

TitleMedical Spending, Bequests, and Asset Dynamics Around the Time of Death
Publication TypeReport
Year of Publication2020
AuthorsJones, JBailey, De Nardi, M, French, E, McGee, R, Rodgers, R
Series TitleNBER Working Paper Series
Document Number26879
InstitutionNational Bureau of Economic Research
CityCambridge, MA
TypeReport
KeywordsAsset dynamics, End of life expenses, Medical spending
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 6 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 non-spousal heirs such as children are more than sufficient to explain the remainder.

URLhttp://www.nber.org/papers/w26879
DOI10.3386/w26879
Citation KeyNBERw26879