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fbtwitterlinkedinvimeoflicker grey 14rssslideshare1
Todd Sinai; Nicholas S. Souleles (2007)
Publisher: Goethe University, Center for Financial Studies (CFS) Frankfurt a. M.
Types: Research
Subjects: USA, Housing, G11, Eigenkapital, Privater Haushalt, Retirement, Retirement ; Housing, Immobilien, Eigenheim, Ruhestand, Vermögen, Bewertung, Housing,Home Equity,Retirement,Net Worth, E21, Net Worth, Rentner, Home Equity, Geschichte 1983-2004, Lebenszyklus
jel: jel:E21, jel:G21, jel:J14, jel:G11, jel:R21
ddc: ddc:330
This paper documents the trends in the life-cycle profiles of net worth and housing equity between 1983 and 2004. The net worth of older households significantly increased during the housing boom of recent years. However, net worth grew by more than housing equity, in part because other assets also appreciated at the same time. Moreover, the younger elderly offset rising house prices by increasing their housing debt, and used some of the proceeds to invest in other assets. We also consider how much of their housing equity older households can actually tap, using reverse mortgages. This fraction is lower at younger ages, such that young retirees can consume less than half of their housing equity. These results imply that ‘consumable’ net worth is smaller than standard calculations of net worth. JEL Classification: G11, E21
  • The results below are discovered through our pilot algorithms. Let us know how we are doing!

    • Bernheim, B. Douglas, Solange Berstein, Jagadeesh Gokhale, and Laurence J. Kotlikoff, “How Much Should Americans Be Saving For Retirement?” American Economic Review 90 (2), May 2000, 288-292.
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    • Davidoff, Tom. “Maintenance and the Home Equity of the Elderly.” UC Berkeley Working Paper (July 19, 2006).
    • Engen, Eric M., William Gale, and Cori Uccello. “The Adequacy of retirement Saving,” Brooking Papers on Economic Activity, #2, 1999.
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    • Megbolugbe, Isaac, Jarjisu Sa-Aadu, and James Shilling, “Oh, Yes, the Elderly will Reduce Housing Equity Under the Right Circumstances,” Journal of Housing Research (1997), vol. 8, 53-74.
    • Merrill, Sally R., Meryl Finkel, and Nandinee Kutty, “Potential Beneficiaries from Reverse Mortgage Products for Elderly Homeowners: An Analysis of American Housing Survey Data,” Journal of the American Real Estate and Urban Economics Association (1994), vol. 22, 257-299.
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