Retiring on the House? Cross-Cohort Differences in Housing Wealth

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This chapter evaluates the role of housing wealth in Baby Boomers’ retirement prospects, to determine what role housing wealth will play in their retirement wellbeing. Our approach compares the wealth position of the leading edge of the Boomers with that of the generation immediately preceding it, in the years just prior to retirement. We rely on the Health and Retirement Survey (HRS) and compare persons age 51-61 in 1992, whom we refer to as the original HRS cohort, with the Early Baby Boomers interviewed at age 51-56 interviewed in 2004. We find that Boomers do have more valuable homes, but they have also borrowed more against them, so they have a similar fraction of assets allocated to home equity as their predecessors. Unlike prior studies, we find that people do view housing as a source of wealth that can help them finance their retirement needs. Indeed, a substantial fraction of older households do move, and in the process, they appear to liquidate some home equity which they convert to financial assets. Consequently, some of the home equity extraction observed in recent years may be related to the aging of the population, rather than a cyclical response to rapid house appreciation.

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The published version of this Working Paper may be found in the 2007 publication: Redefining Retirement: How Will Boomers Fare? (
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