Home Equity in Retirement

Makoto Nakajima () and Irina Telyukova ()

No 19-50, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Retired homeowners dissave more slowly than renters, which suggests that homeownership a?ects 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 ?nd, ?rst, 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 28-44 percent lower, depending on age.

Keywords: Housing; Retirement Saving Puzzle; Mortgage; Health; Life cycle; Medical expenditure; Bequest (search for similar items in EconPapers)
JEL-codes: D91 E21 G11 J26 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2019-12-09
New Economics Papers: this item is included in nep-age, nep-dge, nep-mac and nep-ure
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: HOME EQUITY IN RETIREMENT (2020)
Working Paper: Home Equity in Retirement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:19-50

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DOI: 10.21799/frbp.wp.2019.50

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