Associations between Health and Later Life Wealth and Intergenerational Transfers of Wealth

Megan Andrew, University of Wisconsin at Madison
Erin Ruel, Georgia State University

Inter-vivos transfers are an important element in the transmission of wealth. Ruel and Hauser (2005) found that intergenerational transfers played a large role in the accumulation of wealth from mid life to retirement age. One factor that could have a negative impact on wealth accumulation and intergenerational transfers are short or long term health or disability problems, which may cause individuals to spend down their wealth as they consume health care. This is a concern in the United States as we face an aging population that will produce greater incidences of chronic disease. We ask, how do short term health problems at mid life (age 53-55) affect later life (age 64-65) wealth accumulation and inter-vivos transfers to adult children? Data for this paper come from the Wisconsin Longitudinal Study (WLS). The WLS is a long-term study of a one-third random sample (N=10,317) of men and women who graduated from Wisconsin high schools in 1957.