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Incomes of Retirement-age and Working-age Canadians: Accounting for Home Ownership

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Author Info

  • Brown, W. Mark
  • Lafrance, Amelie
  • Hou, Feng

Abstract

This paper estimates the implicit income generated by the home equity of working-age and retirement-age households. In so doing, it expands our understanding of Canadians' preparation for retirement by taking into account the services that homeowners realize as a result of having invested in their homes. On the basis of both the 2006 Survey of Household Spending and the 2006 Census of Population, we find that housing services make an important contribution to household income. When estimates of the services provided by the equity invested in housing are added to traditional estimates of income, the income of retirement-age households is increased by 9% to 12% for those in the 60-to-69 age class and by 12% to 15% for those in the 70-plus age class. In turn, this additional income reduces the difference in income between working-age and retirement-age households that own their own homes. According to the Survey of Household Spending, net incomes decline by about 45% between the peak household earning years and the 70-plus retirement-age class. This figure is reduced to 42% when the contribution of housing services is taken into account. The Census provides a similar picture: the gap in incomes is 38% when net income alone is considered and 35% when one accounts for housing services.

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Bibliographic Info

Paper provided by Statistics Canada, Analytical Studies Branch in its series Economic Analysis (EA) Research Paper Series with number 2010064e.

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Date of creation: 26 Jul 2010
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Handle: RePEc:stc:stcp5e:2010064e

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Web page: http://www.statcan.gc.ca
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Related research

Keywords: Income; pensions; spending and wealth; Seniors; Work and retirement;

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Cited by:
  1. Elena Simonova & Rock Lefebvre & Kevin Girdharry, 2011. "Planning for Retirement - There is no Substitute," Working Papers 111105, Certified General Accountants Association of Canada.
  2. Pierre-Carl Michaud & Philip Merrigan & Pierre Lefebvre, 2012. "The Recent Evolution of Retirement Patterns in Canada," CIRANO Working Papers 2012s-37, CIRANO.
  3. Asakawa, Keiko & Senthilselvan, Ambikaipakan & Feeny, David & Johnson, Jeffrey & Rolfson, Darryl, 2012. "Trajectories of health-related quality of life differ by age among adults: Results from an eight-year longitudinal study," Journal of Health Economics, Elsevier, vol. 31(1), pages 207-218.
  4. Kevin D. Moore & William Robson & Alexandre Laurin, 2010. "Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 317, December.
  5. Konstantin A. Kholodilin & Andreas Mense, 2011. "Can Internet Ads Serve as an Indicator of Homeownership Rates?," Discussion Papers of DIW Berlin 1168, DIW Berlin, German Institute for Economic Research.

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