Incomes of Retirement-Age and Working-Age Canadians: Accounting for Home Ownership

Statistics Canada Economic Analysis Research Paper No. 64

42 Pages Posted: 2 Sep 2010

See all articles by W. Mark Brown

W. Mark Brown

Statistics Canada

Amélie Lafrance

Statistics Canada

Feng Hou

Statistics Canada

Date Written: July 26, 2010

Abstract

This paper estimates the implicit income generated by the home equity of working-age and retirement-age households. In so doing, it expands our understanding of Canadians’ preparation for retirement by taking into account the services that homeowners realize as a result of having invested in their homes. On the basis of both the 2006 Survey of Household Spending and the 2006 Census of Population, we find that housing services make an important contribution to household income. When estimates of the services provided by the equity invested in housing are added to traditional estimates of income, the income of retirement-age households is increased by 10% to 13% for those in the 60-to-69 age class and by 12% to 15% for those in the 70-plus age class. In turn, this additional income reduces the difference in income between working-age and retirement-age households that own their own homes. According to the Survey of Household Spending, net incomes decline by about 45% between the peak household earning years and the 70-plus retirement-age class. This figure is reduced to 42% when the contribution of housing services is taken into account. The Census provides a similar picture: the gap in incomes is 38% when net income alone is considered and 35% when one accounts for housing services.

Keywords: Equity, Income, Retirement, Seniors

JEL Classification: D31, J26

Suggested Citation

Brown, Williams Mark and Lafrance, Amélie and Hou, Feng, Incomes of Retirement-Age and Working-Age Canadians: Accounting for Home Ownership (July 26, 2010). Statistics Canada Economic Analysis Research Paper No. 64, Available at SSRN: https://ssrn.com/abstract=1663970 or http://dx.doi.org/10.2139/ssrn.1663970

Williams Mark Brown (Contact Author)

Statistics Canada ( email )

Ottawa, Ontario
Canada

Amélie Lafrance

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-0060 (Phone)

Feng Hou

Statistics Canada ( email )

Ottawa, Ontario
Canada

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