How Much Does Housing Affect Retirement Security? An NRRI Update

IB#16-16

The brief’s key findings are:

  • Net housing wealth, a major asset for most households, depends on the value of the house and the amount of mortgage debt.
  • The analysis tests how below-trend house prices and high housing debt affected the 2013 National Retirement Risk Index (NRRI).
  • The results show that the impact of house prices and, particularly, debt, was large; absent these effects, the NRRI would have been 44 percent rather than 52 percent.
  • Looking past 2013, the continuing recovery in house prices will help the NRRI a bit, but it is unclear whether the high-debt pattern is temporary or permanent.