Did You Really Save so Little for Your Retirement? An Analysis of Retirement Savings and Unconventional Retirement Accounts
The identification of the empirical relevance of saving motives has created several problems to applied researchers in recent years. While there is theoretical consensus that a broad formulation of the intertemporal allocation problem allows the identification of three motives to save (Gourinchas and Parker 2001), it is far from clear what the empirical relevance is of these motives. It is very difficult to quantify the amount of savings that households are putting aside for retirement purposes specifically (such as retiring early or supplementing future pension benefits), as this type of saving is not in theory separable from other types.
Studies on non-compulsory retirement savings typically explore the traditional products in the household portfolio, such as annuities and life insurances (Brown et al 2007), but neglect the existence of unconventional retirement accounts. “A house or a pension?” titled The Independent a few years ago, claiming that you could get two for the price of one. We will also show that many home owners regard their home as a pension saving. This is what we mean by unconventional retirement savings: that part of wealth put aside to finance consumption after retirement, which is not held in a traditional retirement account, but invested in real estate or any other saving account.