Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108CH APTER 3 69 understand the extent to which people use hous- ing equity to support their consumption during re- tirement. People can spend down or consume the equity value of their homes in a number of ways, including through reverse mortgages, refinancing, and home equity loans. One study of HRS data from the 1990s considered two other ways that households can change their home equity: first, by ceasing to own a home at all, and, second, by sell- ing one home and moving to a less valuable one (Venti and Wise 2001). The data show that house- holds in general are unlikely to discontinue home ownership, even after the death of a spouse or a family member’s move to a nursing home. When a home is sold, it is much more common to buy another rather than discontinue home ownership altogether, and the new home tends to be more expensive than the previous one, thus increasing the value of home equity. There is an age threshold, however, at which the change in housing value shifts direction. HRS data show that in the 1990s, housing equity increased until about age 75 and then declined slightly as household members grew older. For people age 70 and older as a whole, housing equity declined about 1.8 percent per year; most of this decline is accounted for by an 8 percent annual decline among households that experi- enced a death or major unexpected health event (Walker 2004). Further study of people age 70 and older indicates that the death of a wife is more likely to spur the widower to sell than vice versa. Poor, married homeowners appear to be more likely than their wealthier counterparts to consume their housing wealth. Wealth and Health An important finding from the HRS is the strong correlation between health and wealth. In 2002, the mean household wealth (using the net worth concept described above) of married couples reporting excellent health was approximately three times that of married couples reporting poor health (an average of $500,000 compared with $164,000) (Figure 3-10). The relative difference among unmarried HRS participants is even more striking, with average household wealth for those reporting excellent health more than five times greater than for those reporting poor health. FIG. 3-10 Health and net worth: 2002 (Mean household net worth in dollars) Self-Reported Health Poor Fair Good Very Good Excellent $0 $100,000 $200,000 $300,000 $400,000 $500,000 Single Individuals Couples