Potentiality of reverse mortgages to supplement pension: the case of Chile
AbstractReverse mortgages have been established as an alternative for generating liquid flows of income during retirement in some developed countries. Given that the risks associated with lower income during old age are usually covered by a wide range of sources of funding, this paper analyses the potentiality of reverse mortgages as alternative income during old age. This work focuses on the case of Chile, based on information extracted from national surveys that map out the behaviour of representative individuals divided into income quintiles. The changes from 2010 to 2050 are observed on the basis of reasonable assumptions. The pension replacement rates have been found to have increased by nearly 30 points as a result of incorporating life annuities derived from property assets. This result supports the concept of not just fixing policies aimed at improving formal pension schemes, but facilitating private financial mechanisms that generate other suitable forms of income during old age derived from other assets.
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Bibliographic InfoPaper provided by BBVA Bank, Economic Research Department in its series Working Papers with number 1311.
Length: 14 pages
Date of creation: Feb 2013
Date of revision:
reverse mortgage; private pensions; pension funds; defined contribution;
Find related papers by JEL classification:
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-04-13 (Economics of Ageing)
- NEP-ALL-2013-04-13 (All new papers)
- NEP-CWA-2013-04-13 (Central & Western Asia)
- NEP-LAM-2013-04-13 (Central & South America)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Biliana Alexandrova-Kabadjova & Sara G. Castellanos Pascacio & Sara G. Castellanos Pascacio & Alma L. Garcia-Almanza, 2012.
"The Adoption Process of Payment Cards. An Agent-Based Approach,"
1213, BBVA Bank, Economic Research Department.
- Biliana Alexandrova-Kabadjova & Sara Gabriela Castellanos Pascacio & Alma L. García-Almanza, 2012. "The Adoption Process of Payment Cards -An Agent- Based Approach," Working Papers 2012-02, Banco de México.
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