We model the welfare losses of (i) the presence of a mortgage with required repayments, (ii) a minimum pension savings constraint, and (iii) imposing a suboptimal investment strategy. We develop a life-cycle model which considers housing and interest rate risk. For a reasonable set of parameter values, we find welfare losses of up to 2:41% (5:02%) if a homeowner with a 30-year fixed-rate (adjustable-rate) mortgage faces a minimum savings constraint of 10%. These welfare losses increase sharply if a homeowner is obliged to save an even higher percentage to the retirement account. Moreover, we find sizeable welfare losses when imposing the investment strategy of a homeowner with a mortgage on a homeowner without a mortgage.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.

MEER OVER NETSPAR


Missie en strategie           •           Netwerk           •           Organisatie           •          Podcasts
Board Brief            •            Werkprogramma 2023-2027           •           Onderzoeksagenda

OVER NETSPAR

Onze partners

B20160708_tilburg university
B20200214_BlackRock_BLK_eng_black_rgb_small
B20200104_RailOV_logoo.original.grijswaarden
Print
B20190823_mn-logo_small
Bekijk al onze partners