The fourth retirement pillar in rich nations

What role does the fourth retirement pillar of home ownership and private saving play in rich nations? Does this asset-based welfare spread the risks of retirement provision or does it distort consumption patterns and fail to improve the non-housing consumption of the elderly? Is it associated with more or less inequality of retirement consumption? This paper examines the role of home ownership and non-pension saving in supporting the consumption of the elderly in eight wealthy nations using data from the Luxembourg Wealth Study. Home ownership rates among the elderly are very high in some nations (Australia and US) and expected to increase in the other countries. In Australia, the country with the highest rate of home ownership, home ownership wealth partly compensates for low average pension income, but also shifts the consumption balance away from nonhousing goods. In the US home ownership wealth reinforces patterns of income inequality. Home ownership can potentially diversify the risks associated with retirement saving, but as recent events have shown, this cannot be relied upon.