AGING AND THE INCOME VALUE OF HOUSING WEALTH

The potential of reverse annuity mortgages to increase the current income of the elderly is analyzed. We conclude that most low-income elderly also have little housing equity. In general, a reverse annuity mortgage would substantially affect the income only of the single elderly who are very old - whose life expectancy is short. On the other hand, if the transfer were in the form of a lump-sum payment, rather than an annuity, the payment would increase the liquid wealth of most elderly families by a large fraction. Thus legislation that would facilitate the market for reverse mortgages could improve substantially the financial status of a small proportion of the elderly. © 1991.