@article {8896, title = {Health Status, Health Shocks, and Asset Adequacy Over Retirement Years.}, journal = {Research on Aging}, volume = {39}, year = {2017}, month = {2017 Jan}, pages = {222-248}, abstract = {

This article uses data on a sample of retirees drawn from the Health and Retirement Study (HRS) to examine changes in health over the retirement years and to estimate the effects of health changes in retirement on wealth. Using the framework of item response theory, we develop a novel measure of health that makes use of multiple indicators of physical health that are available in the HRS. We find that large negative shocks to the health of male retirees and their spouses are frequent in retirement and that when such shocks do occur, recovery to the preshock level of health is rare. Using a dynamic panel data model, we then estimate short- and long-run effects of changes in health on wealth. While our estimated short-run effects are modest, long-run estimates of the impact of health shocks on wealth are large, ranging from a 12\% to 20\% reduction in wealth by the 10th year, following a permanent one standard deviation decrease in health.

}, keywords = {Health Conditions and Status, Health Shocks, Older Adults, Retirement Planning and Satisfaction}, issn = {1552-7573}, doi = {10.1177/0164027516669567}, author = {Geoffrey L Wallace and Haveman, Robert and Barbara Wolfe} } @inbook {5257, title = {Health and Wealth in Early Retirement}, booktitle = {Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health}, year = {2013}, pages = {261-279}, publisher = {Stanford University}, organization = {Stanford University}, address = {Stanford, CA}, abstract = {Retirement years are a precarious time for many older Americans. Even if successful in accumulating resources expected to be sufficient to maintain their pre-retirement standard of living, many retirees face unexpected adverse health shocks after retirement. Because of the uncertainty of shocks to physical and cognitive health, there exists the potential for significant deterioration in resource adequacy both at the time of retirement and into the retirement years due to their occurrence. In this study, we select a sample of new retirees constructed from the Health and Retirement Study (HRS) data and follow them during the first decade of their retirement. Using these data, we identify the nature of shocks to physical and cognitive health for which individuals are at risk during their retirement years, and estimate both the absolute and relative risk of these shocks. We then estimate the impact of the occurrence of these shocks on wealth-based measures of retirement adequacy.}, keywords = {Health Conditions and Status, Income, Retirement Planning and Satisfaction}, author = {Geoffrey L Wallace and Haveman, Robert and Karen C. Holden and Barbara Wolfe}, editor = {Kenneth A. Couch and Mary C. Daly and Julie M Zissimopoulos} }