2013 Conference

Financial Services

Health

Previous research has illuminated the connection between a person’s health to later-life decisions about whether and when to retire, but few studies have addressed the possible influence of own-health and family-health histories on earlier aspects of retirement planning. In this exploratory study, we examine the relationships between personal and family health history and retirement preparation activities with tests for the possible mediating effects of risk tolerance and subjective life expectancy.  Using unique data on 1,005 survey respondents that have been linked to their personal and familial health histories, we examine four retirement preparation activities: (1) how respondents assess their level of financial knowledge, (2) whether respondents have met recently with a professional financial advisor, (3) whether respondents have calculated the financial amount needed to meet retirement needs, and (4) how they have allocated any retirement savings across stocks, bonds, and other assets. We find that both own-health history and parental longevity are more predictive of the knowledge/advice dimensions of retirement preparation than either calculating retirement needs or allocating retirement savings. We also find very little evidence of mediation effects.  Thus, identifying the mechanisms by which health history is connected to retirement preparation remains a topic for future research.