Statistics Canada has published a 2006 study labeled “Impact of home equity on incomes of retirement-age households”, that shows how the equity that homeowners have built up through a lifetime of investment in their homes makes an important contribution to household finances as they enter retirement.

By retirement age, 75% of households are homeowners, and of those, 74% own their homes without a mortgage.

The economic benefit of owning a home is equivalent to the rent that does not have to be paid.

In 2006, when the value of this benefit was taken into account for households headed by individuals in the age group 60 to 69, it increased incomes by $5,500 or 10%.

For households headed by those in the age group 70 and over, incomes rose by $5,400 or 12%.

For households in the age group 70 and over whose household income was ranked in the bottom 20%, home ownership raised incomes, on average, by about $4,200 or 20%.

For households in the same age group whose income ranked in the top 20%, income increased by $10,400, but, in proportional terms, by a more modest 7%.

The research paper “Incomes of Retirement-age and Working-age Canadians: Accounting for Home Ownership,” is now available as part of the Economic Analysis (EA) Research Paper Series (11F0027M2010064, free) from the Key resource module of our website under Publications.

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Tags: equity, homeowners, households, retirement