Towards the end of bequest? The life cycle hypothesis sold to seniors

Resumo

Reverse mortgages are designed for senior homeowners said to be “house rich, cash poor.” They allow for the extraction of equity from homes without payments being made until death or the house is sold. They are designed to alleviate public long-term care expenses, as well as to maintain senior citizens’ well-being and consumption standards. Inspired by the life cycle hypothesis, they imply “eating the house” in order to meet one’s needs, as well as giving up the idea of bequest. This paper addresses the lengthy take-off of reverse mortgage markets, the life cycle theory sustaining reverse mortgage policies, and the financial and material consequences of their purchase for aged homeowners. Whereas evaluation reports and case studies bring to light constraints already driving indebted younger elders to come to what appears to be a ‘last resort solution’, one may ask whether reverse mortgage buyers do represent a kind of avant-garde conforming to the life cycle hypothesis requisites.