Abstract:
We show that requiring individuals to contribute a constant share of their labor income to a retirement account increases loan-to-value ratios and typically defers homeownership. We investigate three alternative pension systems: (1) early withdrawals to acquire homeownership, (2) age-dependent contributions, and (3) a flexible scheme, which builds on the intuition, that it is not important how individuals build up savings as long as they build up sufficient savings, and only forces individuals to save when they miss the age-dependent savings target. All three systems lead to a similar accumulation of wealth, but lower loanto-value ratios, usually earlier homeownership, and higher welfare.
