Risk Management in Retirement – What is the Optimal Home Equity Release Product?
نویسندگان
چکیده
This paper studies the optimal choice of home equity release products. The decision problem of a retiring couple is modeled that holds the major fraction of their wealth as home equity and faces longevity, long-term care, house price, and interest rate risk. The couple can choose to buy annuities, long-term care insurance, and to borrow against the home using different equity release products. These decisions involve the timing problem of when to optimally release home equity. The framework is used to compare the welfare effects of different home equity release products and to study the role of government-provided long-term care insurance. JEL Classification: D14, D91, G11, R20
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