Effects of the Economic Crisis on the Older Population: How Expectations, Consumption, Bequests, and Retirement Responded to Market Shocks

Michael Hurd and Susann Rohwedder

Abstract — We study the effects of the 2007-09 recession on the population age 55 and older. Households in and near retirement have suffered sizeable losses in assets as a result of the economic crisis. There are a number of ways in which households might respond: reduce spending and with that increase saving, work longer, and/or bequeath less. Using longitudinal data from the Health and Retirement Study and its supplemental surveys, we find that all of these adjustments have been important.

Keywords: recession, household expectations, housing, consumption, retirement, wealth, Health and Retirement Study