Demographic Trends, Housing Equity, and the Financial Security of Future Retirees

James M. Poterba, Steven F. Venti and David A. Wise

in Demography and the Economy

Published by University of Chicago Press

Published in print January 2011 | ISBN: 9780226754727
Published online February 2013 | e-ISBN: 9780226754758 | DOI:
Demographic Trends, Housing Equity, and the Financial Security of Future Retirees

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This chapter explores one of the largest asset categories for present and future retirees, namely the equity in their homes. For most people, the big three asset categories in retirement are social security wealth, pension accumulations, and home equity. This chapter does similar cohort analyses for home equity. It is found that the likelihood of home ownership by age changed very little over the past twenty-five years for married couples, single women, and single men. It is well known that most retirees stay in their home and retain their home equity until late in retirement, when shocks such as the death of a spouse or entry into a nursing home may cause the home to be sold. In a way, the house serves as a “rainy day fund” for potential life changes or expensive developments later in life. This raises the natural question about whether home equity is a safe store of wealth for the rainy day fund.

Keywords: demographic trends; housing/home equity; financial security; future retirees; social security wealth; pension accumulations; cohort analyses; rainy day fund

Chapter.  17976 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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