Tenure Choice, Disability Risk and Retirement Savings - Why is it Connected?
In order to explain the savings behavior of elderly our study highlights the role of hous- ing equity. The latter serves a dual purpose as a consumption good and as an asset, in addition it may be used as an implicit insurance vehicle to buffer long-term care shocks. Our stylized life cycle model captures this link between tenure choice, health care risks and insurance coverage in retirement. In contrast to previous studies we consider home equity as a non-risky investment which alters the optimal portfolio choice of elderly significantly. In addition, our results indicate that long-term care risks may be an important determinant of tenure choice even without the availability of reverse mortgage options.
Please note that the seminar starts at 5pm sharp (not 5.15pm)