Current research

Michaud, Pierre-Carl and Pascal St-Amour (2023), “Longevity, Health and Housing Risks Management in Retirement”, NBER Working Paper w31038. Current version (paper, online appendix)

  • Abstract:

    Annuities, long-term care insurance and reverse mortgages remain unpopular products to manage longevity, health and housing price risks after retirement. We analyze the lack of interest 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 limited demand. Bequests motives are found to be a luxury good and play a restricted role. The remaining disinterest is explained by information frictions and inertia. We find evidence of strong spousal co-insurance motives motivating LTCI and of responsiveness to bundled products with a near doubling of demand for annuities when reverse mortgages can be used to annuitize home equity.