Template-Type: ReDIF-Paper 1.0
Title: Longevity, Health and Housing Risks Management in Retirement 
Author-Name: Pierre-Carl Michaud
Author-Name: Pascal St-Amour
Creation-date: 2023
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.
Classification-JEL: J14, G52, G53
Keywords: retirement wealth; insurance; health risk; housing risk
File-URL: https://ire.hec.ca/wp-content/uploads/2023/03/cahier_IRE_13_longevity_health_housing_risks_management_retirement.pdf
File-Size: 1400
Handle: RePEc:rsi:irersi:13