James M. Poterba, Steven F. Venti, and David A. Wise
- Published in print:
- 2011
- Published Online:
- February 2013
- ISBN:
- 9780226754727
- eISBN:
- 9780226754758
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226754758.003.0008
- Subject:
- Economics and Finance, Macro- and Monetary Economics
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 ...
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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.Less
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.
James Banks, Richard Blundell, and James P. Smith
- Published in print:
- 2004
- Published Online:
- February 2013
- ISBN:
- 9780226903057
- eISBN:
- 9780226903286
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226903286.003.0006
- Subject:
- Economics and Finance, Behavioural Economics
This chapter documents and attempts to explain differences in household wealth distributions between the United States and the United Kingdom, with an emphasis on the quite different portfolios held ...
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This chapter documents and attempts to explain differences in household wealth distributions between the United States and the United Kingdom, with an emphasis on the quite different portfolios held in stock and housing equities in the two countries. As a proportion of their total wealth, British households hold relatively small amounts of financial assets—including equities in stock—compared to American households. In contrast, British households appear to move into home ownership at relatively young ages, and a large fraction of their household wealth is concentrated in housing. Finally, the age gradient in home equity appears to be much steeper in the United Kingdom whereas U.S. households exhibit a steeper age gradient in stock equity. Moreover, these portfolio differences between the two countries are not temporally static, as important changes have been taking place in both countries in their housing and equity markets.Less
This chapter documents and attempts to explain differences in household wealth distributions between the United States and the United Kingdom, with an emphasis on the quite different portfolios held in stock and housing equities in the two countries. As a proportion of their total wealth, British households hold relatively small amounts of financial assets—including equities in stock—compared to American households. In contrast, British households appear to move into home ownership at relatively young ages, and a large fraction of their household wealth is concentrated in housing. Finally, the age gradient in home equity appears to be much steeper in the United Kingdom whereas U.S. households exhibit a steeper age gradient in stock equity. Moreover, these portfolio differences between the two countries are not temporally static, as important changes have been taking place in both countries in their housing and equity markets.
