Advanced Search
MyIDEAS: Login to save this paper or follow this series

Housing assets and savings behaviour among the elderly in Great Britain

Contents:

Author Info

  • Richard Disney

    ()
    (Institute for Fiscal Studies and University of Nottingham)

  • Thomas Gallagher
  • Andrew Henley

Abstract

The modern life cycle theory of consumption predicts dissaving of assets during retirement. But evidence suggests that dissaving occurs at a relatively slow rate, so that many households bequeath assets. Evidence from the Retirement Survey in Britain suggests that the portfolio of bequeathable assets changes subsequent to retirement: typically home owners run down their financial assets while the value of the housing stock is maintained for a long period. This may reflect a desire to bequest the house, or a precautionary motive for holding a housing asset against catastrophic risks to consumption (for example the need for specialised and expensive health and nursing care). Holding on to a substantial housing stock may incur significant recurrent (maintenance) costs. Moreover the existence of significant (housing) assets long into retirement may not signify a bequest motive as such but rather the presence of transactions costs and the absence of well-functioning equity release schemes. The observed financial asset dissaving may then result in part from 'excess' ownership of housing stocks. The study, using the 1988-89 Retirement Survey in Britain: (i) estimates expenditure on housing relative to income for the sample aged 55-69, (ii) simulates optimal housing/consumption allocations for a simple life cycle model and (iii) examines the relationship between 'excess' holdings of housing, financial dissaving and other portfolio behaviour subsequent to retirement. It shows that households with large housing budget shares tend to run down financial assets more rapidly, and that net equity release from downsizing housing assets is typically used up in consumption over a short period. This might suggest a welfare case for widening and improving the market for schemes which permit incremental equity release (such as reverse annuity mortgages).

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W95/22.

as in new window
Length:
Date of creation: Jan 1995
Date of revision:
Handle: RePEc:ifs:ifsewp:95/22

Contact details of provider:
Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE
Phone: (+44) 020 7291 4800
Fax: (+44) 020 7323 4780
Email:
Web page: http://www.ifs.org.uk
More information through EDIRC

Order Information:
Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE
Email:

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Henley, A, 1996. "Residential Mobility, Housing Wealth and the Labour Market," Working Papers 96-15, University of Wales, Aberystwyth, Department of Economics.
  2. Richard Disney & Paul Johnson & Gary Stears, 1998. "Asset wealth and asset decumulation among households in the Retirement Survey," Fiscal Studies, Institute for Fiscal Studies, vol. 19(2), pages 153-174, May.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:95/22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Seavers).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.