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Longevity, Health and Housing Risks Management in Retirement

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  • Pierre-Carl Michaud
  • Pascal St. Amour

Abstract

Annuities, long-term care insurance and reverse mortgages remain puzzlingly unpopular to manage post-retirement longevity, health and housing price risks. We analyze the lack of interest using a flexible life-cycle model structurally estimated with a unique stated-preference survey experiment of Canadian households. High risk aversion, preference for early resolution of uncertainty, strong discounting of valuation in disability states, housing substitutability and bequest motives play key roles in explaining most of the limited demand. The remaining disinterest is accounted for by information frictions and inertia. We also document evidence of public crowding out, spousal co-insurance and of responsiveness to products bundling.

Suggested Citation

  • Pierre-Carl Michaud & Pascal St. Amour, 2023. "Longevity, Health and Housing Risks Management in Retirement," NBER Working Papers 31038, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31038
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    3. de Bresser, J.; & Knoef, M.; & van Ooijen, R.;, 2024. "The market for life care annuities: using housing wealth to manage longevity and long-term care risk," Health, Econometrics and Data Group (HEDG) Working Papers 24/11, HEDG, c/o Department of Economics, University of York.

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    More about this item

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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