Home Equity in Retirement

47 Pages Posted: 29 Jul 2011 Last revised: 31 Dec 2012

See all articles by Makoto Nakajima

Makoto Nakajima

Federal Reserve Bank of Philadelphia

Irina A. Telyukova

University of California, San Diego

Multiple version iconThere are 2 versions of this paper

Date Written: December 27, 2012


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 signi cantly increased homeowners' assets. These channels are quantitatively signi cant; 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

Nakajima, Makoto and Telyukova, Irina, Home Equity in Retirement (December 27, 2012). Available at SSRN: https://ssrn.com/abstract=1898330 or http://dx.doi.org/10.2139/ssrn.1898330

Makoto Nakajima (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Irina Telyukova

University of California, San Diego ( email )

9500 Gilman Drive
San Diego, CA 92093
United States

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