Income-poor, asset-rich? The role of homeownership in shaping the welfare position of the elderly

Abstract

The study explores the distribution of elderly households in terms of combinations of different levels of income and wealth and relates to the typically greater homeownership rates in this group than in the younger generation. Using microdata from the Luxembourg Wealth Study for 12 countries it demonstrates that ‘income-poor, asset-rich’ elderly households are a quite marginal category. However, the identification of this group is crucial from the policy perspective, as it constitutes a target for actions aiming at increasing the ability of the elderly households to use housing wealth in such a way as to improve their financial well-being. The results also suggest that higher homeownership rates among elderly households, as compared to non-elderly households, are not accompanied by proportionally greater household wealth. Nevertheless, when the level of data aggregation is reduced, there is some evidence that homeownership is positively associated with the welfare position of the elderly.