Homeownership: A Key to Well-Being in Retirement

There has been much talk about homeownership and whether it is a true vehicle for building

wealth. A new report looks at the impact owning a home has on the financial well-being of people

closing in on their retirement years (ages 55-64). In a recently released study by the Hamilton Pro-

ject, Ten Economic Facts about Financial Well-Being in Retirement, it was revealed that:

1. Middle-class households near retirement age have about as much wealth in their homes as they

do in their retirement accounts. Over the past quarter century the largest single source of wealth for all

but the richest households nearing retirement age has been their homes, which accounted for about two-

fifths of net worth in the early 1990s and accounts for about one-third today.

2. Home equity is a very important source of net worth to all, but the wealthiest households near re-

tirement age. Home equity is an important source of wealth for middle income households, accounting for

more than one-third of total net worth for the second, third, and fourth quintiles of the net worth distribu-

tion The fifth quintile has a much larger share in business equityalmost a quarterthan any other quintile.

(The figure leaves out the bottom quintile of households because they have negative net worth. It is likely that

these households will rely almost exclusively on Social Security in retirement.)

Here is an asset breakdown for the middle 20% of Americans, determined by median net worth

($165, 720):

Obviously, the data again proves that homeownership has a big role in building wealth for American families.