Aging in Place, Housing Maintenance, and Reverse Mortgages

• 成果类型: Article
• 署名作者: Cocco, Joao F.; Lopes, Paula
• 署名单位: University of London; London Business School; Center for Economic & Policy Research (CEPR); University of London; London School Economics & Political Science; Tilburg University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdz047
• 发表日期: 2020
• 页码: 1799-1836
• 关键词: portfolio choice; demand; insurance; HEALTH; consumption; liquidity; MODEL; RISK

摘要

We study the role of housing wealth in financing retirement consumption. In our model retirees: 1. derive utility benefits from remaining in their home (aging in place); and 2. choose in each period whether to maintain their house. The evidence that we present shows that these features are important in explaining the saving decisions of the elderly. The costs and the maintenance requirement of reverse mortgages (RMs) reduce (or eliminate) the benefits of the loans for retirees who wish to do less maintenance. We evaluate the impact of different loan features on retirees' utility, cash-flows to lenders, and to the government agency that provides mortgage insurance. We show that combining RMs with insurance against a forced home sale (e.g. due to a move to a nursing home) is Pareto improving and can lead to increased demand for the loans due to product complementarities.