Expected bequests and current wealth of older households

The life-cycle theory predicts that wealth should be fully annuitized to insure longevity risks. If annuity markets are incomplete and elderly individuals face other risks (notably, health risks) wealth holdings will include other financial and real assets. However, the life-cycle model under uncertainty does imply that non-annuitized wealth should be decumulated in old age. The extent to which this happens is an open issue.There are three questions in SHARE that provide information on intended bequests: they record the probability that the respondent will give any bequest, a bequest above 50,000 euro or a bequestabove 150,000 euro. Similar questions are also asked to HRS and ELSA respondents. Using this information and current wealth holdings in SHARE, ELSA and HRS data we assess whether and to what extent households plan to decumulate assets in old age. We build upon previous work by Hurd and Smith (2002) on the HRS sample to estimate expected bequests for each respondent, and show how bequests differ across countries. Our quasi-likelihood estimation procedure models theexpected value of the intended bequest as a function of household demographics, current consumption, financial and real wealth, health status, cognition and social interaction indicators.By comparing the current wealth holdings and the expected intended bequests we compute the pattern of future saving and assess its cross-country variability with respect to the importance of housing wealth.