Longevity, Health and Housing Risks Management in Retirement

Pierre-Carl Michaud and Pascal St-Amour
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Pascal St-Amour: University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Swiss Finance Institute

No 23-18, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Annuities, long-term care insurance and reverse mortgages remain unpopular to manage longevity, medical and housing price risks after retirement. We analyze low demand using a life-cycle model structurally estimated with a unique stated-preference survey experiment of Canadian households. Low risk aversion, substitution between housing and consumption and low marginal utility when in poor health explain most of the reduced demand. Bequests motives are found to be a luxury good and play a limited role. The remaining disinterest is explained by information frictions and behavioural status-quo biases. We find evidence of strong spousal co-insurance motives motivating LTCI and of responsiveness to bundling with a near doubling of demand for annuities when reverse mortgages can be used to annuitize, instead of consuming home equity.

Keywords: retirement wealth; insurance; health risk; housing risk (search for similar items in EconPapers)
JEL-codes: G52 G53 J14 (search for similar items in EconPapers)
Pages: 97 pages
Date: 2023-03
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-upt and nep-ure
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Longevity, Health and Housing Risks Management in Retirement (2023)
Working Paper: Longevity, Health and Housing Risks Management in Retirement (2023)
Working Paper: Longevity, Health and Housing Risks Management in Retirement (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2318

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