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Retired house owners reluctant to redeem house value

26 November 2018
Eduard Suari-Andreu
Eduard Suari-Andreu

Dutch households are reluctant to cash in on their home ownership for consumption during their retirement. Although their own home is an important part of their total property, they don't see home ownership as a way to save for their retirement. The low willingness to liquidate the housing value is caused, among other things, by the fact that home owners regard their own home as an important part of inheritance for their children. These are the conclusions of Eduard Suari-Andreu, who will be awarded a PhD by the University of Groningen on 6 December.

The ageing population in industrialized countries is creating major challenges for the sustainability of pension and health systems. Although much transformation has taken place in the past few years to meet these challenges, a lot of work must still be done to guarantee that pension and health systems remain sustainable. Against this background, Suari-Andreu researched the capital accumulation and savings motives of older households. He used data from the Dutch National Household Survey (DHS), Statistics Netherlands (Centraal Bureau voor de Statistiek, CBS) and the Survey on Healthy Ageing and Retirement in Europe (SHARE). Suari-Andreu's findings are important for establishing whether current and future retirees are able to retain an adequate standard of living in the current fast-changing circumstances.

Leaving inheritance is an important savings motive

Suari-Andreu showed that leaving inheritance is an important savings motive for Dutch households, especially for individuals with large assets. He also concluded that wealthier people are more inclined to avoid inheritance tax by passing on assets to their children while they are still alive. Finally, Suari-Andreu found that receiving unexpected inheritance around the age of retirement appears to have no effect on the time of retirement or on the number of hours worked per week.

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