The challenges accompanying demographic change have led many European economies to fundamentally reform their retirement systems by increasingly moving away from pay-as-you-go pension plans towards private, capital-funded old-age provision. For private households, however, building up sufficient capital for their old-age provision poses a challenge. One possible solution is to purchase real estate. Yet, real estate is difficult to use for one’s day-to-day non-housing consumption due to its illiquidity, which is why in a couple of countries worldwide, reverse mortgages have been developed.
Reverse mortgages are financial products which allow retired owner-occupying households to convert their illiquid housing wealth into monthly payments while retaining ownership and the lifelong right to live in their homes. Loan payments are deferred to the end of the life of the contract and will be paid with the proceeds of the sale of the property. Suppliers’ entitlement to this payment is secured by a first mortgage on the home. While in the USA and the UK, reverse mortgages are already being used, that market is still severely underdeveloped in Germany. This project aims to analyse why this is the case.
Within the framework of this project, a survey on the topic "Social Security Systems" is carried out. The survey is currently being conducted in the field.
01.01.2019 - 31.12.2020