Netspar Brief 17 – House and Pension as Financial Legos

Many homeowners currently enjoy rising net income when they retire as a result of lower living expenses after paying off their mortgages, and certainly will into the future. Pension wealth and net home value are major components in the personal wealth of Dutch people who own a home. Flexible access to that wealth over their lifetime could greatly benefit their financial planning. At present, though, the majority of homeowners’ wealth is tied up in their home equity and retirement savings, becoming available only later in their lifetime. In this Netspar Brief, we present a number of home ownership–pension combinations and discuss the impact they could have as “financial LEGO blocks” for achieving greater flexibility in financial planning. Specifically, we talk about the options for cashing in on home equity and outline the advantages and disadvantages, as well as costs and risks. We conclude by offering a new perspective on our future and summarizing some of the recommendations for various actors on how to devise workable and successful home equity–pension combinations.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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