Home Equity in Retirement
47 Pages Posted: 29 Jul 2011 Last revised: 31 Dec 2012
There are 2 versions of this paper
Home Equity in Retirement
Home Equity in Retirement
Date Written: December 27, 2012
Abstract
Retired homeowners dissave more slowly than renters, which suggests that homeownership affects retirees' saving decisions. We investigate empirically and theoretically the life-cycle patterns of homeownership, housing and nonhousing assets in retirement. Using an estimated structural model of saving and housing decisions, we find, first, that homeowners dissave slowly because they prefer to stay in their house as long as possible, but cannot easily borrow against it. Second, the 1996-2006 housing boom signicantly increased homeowners' assets. These channels are quantitatively signicant; without considering homeownership, retirees' net worth would be 28-53% lower, depending on age.
Keywords: Housing, Retirement Saving Puzzle, Mortgage, Health, Life-cycle
JEL Classification: D91, J26, E21, G11
Suggested Citation: Suggested Citation
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