Reminders to Pay Property Tax Payments: A Field Experiment of Older Adults with Reverse Mortgages
27 Pages Posted: 6 Sep 2019
Date Written: August 30, 2019
One of the risks to financial security among older homeowners is the failure to pay property taxes. Tax bills are often due in lump sums, and if the homeowner has a failure of prospective memory, they may neglect to make a payment. This field study tests if reminders to plan ahead and to pay property taxes are effective with an especially liquidity constrained population, older adults who take out a reverse mortgage to extract home equity. Letters mailed to remind homeowners about their obligations reduce the rate of defaults on property taxes, as well as increase timely payments for homeowners’ insurance premiums. These effects are concentrated among subgroups of homeowners who are likely to be the most vulnerable, such as homeowners with no liquid assets, and single households, but also those with more capacity to take actions, such as relatively younger and healthier homeowners.
Keywords: property taxes, seniors, reverse mortgages, reminders
JEL Classification: D1, D14, J14, D91
Suggested Citation: Suggested Citation