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Economic Brief

Sept. 30, 2021

Why Do People Save During Retirement?

According to economic theory, people will accumulate savings while working, then draw them down during retirement to maintain a smooth level of consumption. The latest Economic Brief from the Richmond Fed, however, notes that this isn’t necessarily the case for many groups of people.

Economists Mariacristina De Nardi, Eric French, John Bailey Jones and Rory McGee and writer Tim Sablik find two important drivers of this behavior: the need to prepare for uncertain end-of-life medical expenses and the desire to leave a bequest to surviving family members after death. They also show that the interaction between these two motives is a crucial determinant of saving behavior for all retirees.

The Richmond Fed’s Economic Brief series provides essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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