Longevity, Health and Housing Risks Management in Retirement

52 Pages Posted: 14 Mar 2023

See all articles by Pierre-Carl Michaud

Pierre-Carl Michaud

HEC Montreal

Pascal St-Amour

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Swiss Finance Institute

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Date Written: March 13, 2023

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.

Keywords: Annuity, Long-term care insurance, Reverse mortgage, Asst decumulation, Housing, Disability

JEL Classification: G52, G51

Suggested Citation

Michaud, Pierre-Carl and St-Amour, Pascal, Longevity, Health and Housing Risks Management in Retirement (March 13, 2023). Swiss Finance Institute Research Paper No. 23-18, Available at SSRN: https://ssrn.com/abstract=4388459 or http://dx.doi.org/10.2139/ssrn.4388459

Pierre-Carl Michaud

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Pascal St-Amour (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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