Financing retirement with real estate assets: an analysis of Mexico

Carmen Hoyo and David Tuesta

No 1335, Working Papers from BBVA Bank, Economic Research Department

Abstract: Real estate assets represent a major form of savings for families when they reach retirement age. Reverse mortgages are a financial product developed as an alternative way of generating flows of liquid income during retirement in some countries. As income during old age must be diversified from different sources, in this work we assess the potential of reverse mortgages as an alternative income stream in retirement. Our work focuses on Mexico, using projections of the replacement rate that would be received by an old-aged pensioner, only considering the pension from the Instituto Mexicano del Seguro Social (IMSS), whilst incorporating annuity income from the reverse mortgage. Using a macroeconomic-actuarial model to generate projections, we found that these rates could be increased by 45 percentage points by incorporating annuity income from real estate assets. This result reinforces the concept of establishing not only policies focused on improving formal pension schemes, but also of making private financial mechanisms available to generate other adequate income flows for old age based on alternative assets.

Keywords: reverse mortgage; pensions; defined contribution (search for similar items in EconPapers)
JEL-codes: D14 G21 G22 G23 J32 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2013-12
New Economics Papers: this item is included in nep-age and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bbvaresearch.com/wp-content/uploads/mi ... 35_tcm348-414860.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bbv:wpaper:1335

Access Statistics for this paper

More papers in Working Papers from BBVA Bank, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by OSCAR DE LAS PENAS SANCHEZ-CARO (oscar.delaspenas@bbva.com).