Housing Wealth and Retirement Timing

45 Pages Posted: 22 Feb 2008

See all articles by Martin Farnham

Martin Farnham

University of Victoria - Economics

Purvi Sevak

University of Michigan at Ann Arbor - Mathematica Policy Research

Date Written: October 1, 2007


We use data from the Health and Retirement Study (HRS) and the Office of Housing Enterprise Oversight to measure the effect of changes in housing wealth on retirement timing. Using cross-MSA variation in house-price movements to identify wealth effects on retirement timing, we find evidence that such wealth effects are present. According to some specifications the rate of transition into retirement increases in the presence of positive housing wealth shocks. In addition, we use data on expected age of retirement to measure the impact of housing wealth shocks on expectations about retirement timing. Using renters as a control for heterogeneity in local amenities and using individual fixed effects to control for unobserved individual heterogeneity, we find that a 10% increase in housing wealth is associated with a reduction in expected retirement age of between 3.5 and 5 months.

Suggested Citation

Farnham, Martin and Sevak, Purvi, Housing Wealth and Retirement Timing (October 1, 2007). Michigan Retirement Research Center Research Paper No. UM WP 2007-172, Available at SSRN: https://ssrn.com/abstract=1076751 or http://dx.doi.org/10.2139/ssrn.1076751

Martin Farnham (Contact Author)

University of Victoria - Economics ( email )

Victoria V8W Y2Y, BC

Purvi Sevak

University of Michigan at Ann Arbor - Mathematica Policy Research ( email )

Ann Arbor, MI 481030
United States

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