Reverse Mortgages and Financial Literacy

Ismael Choinière-Crèvecoeur and Pierre-Carl Michaud

Cahiers de recherche / Working Papers from Institut sur la retraite et l'épargne / Retirement and Savings Institute

Abstract: Few retirees use reverse mortgages. In this paper, we investigate how financial literacy and prior knowledge of the product influence take-up by conducting a stated-preference experiment. We exogenously manipulate characteristics of reverse mortgages to tease out how consumers value them and investigate differences by financial literacy and prior knowledge of reverse mortgages. We find that those with higher financial knowledge are more likely to know about reverse mortgages, not more likely to purchase them at any cost but are more sensitive to the interest rate and the insurance value of these products in terms of the non-negative equity guarantee.

Keywords: reverse mortgages; savings; retirement planning; insurance (search for similar items in EconPapers)
JEL-codes: G21 G53 R21 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-age, nep-ban, nep-fle and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Reverse Mortgages and Financial Literacy (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:rsi:irersi:12

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