Standard of Living Gap and Adequacy of Portfolios of the Elderly

Maurizio Paniccià & Francesca Garbuglia, PGAM Economic Research

The significant reduction in the mortality rate in recent decades has brought a new risk to the attention both of households and of pension fund managers: the longevity risk. Its impact is potentially significant on the ability to maintain a decent standard of living during retirement. It is possible that one of the reasons why Italians tend to save even at very old ages reflects a precautionary motive stemming from such uncertainty about the length of life, state of health and conditions of self-sufficiency. Our analysis on a sample of UniCredit clients aged 55 and over makes it clear that a significant part of them does not possess sufficient financial resources to be able to effectively satisfy it long-term needs in the areas of pensions and health services.

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