WI20-10: Home Ownership and Housing Debt in Retirement: Financial Asset for Consumption Smoothing or Albatross Around the Neck of Retirees?

For many retirees, the home is their most valuable asset. A house is used both as investment and to support consumption. If the home is paid for at retirement, the retiree no longer has to service a mortgage or pay monthly rent, freeing up retirement income for other purposes. However, an outstanding mortgage creates a greater amount of mandatory expense that may threaten the ability of Social Security benefits to replace income available for consumption in retirement. Additionally, home equity can be used to finance consumption in retirement, be it general or targeted, such as for emergent health-related expenses or a financial emergency. This research uses the Health and Retirement Study (HRS) panel data for 1992–2016 to investigate how the changing nature of housing debt in retirement impacts retirement security.