Decision analysis of the elderly participating in the housing reverse mortgage: Based on bequest motivation constraint

Abstract

From the perspective of consumption preference and bequest preference, this paper constructs a financial actuarial model and studies thelifetime value change of senior citizens to participate in housing reverse mortgage(HRM). The research results are as follows: (1) The trade-off between changes in the value of consumption and inheritance is the main decision rule to participate in housing reverse mortgage(HRM), and the intensity of bequest motivation is an important constraint mechanism to the lifetime expectation value of the senior citizensparticipating in housing reverse mortgage(HRM); (2) When the bequest motivation of the elderly is relatively weak, the elderly have conversely strong consumption preference, and the elderly participating in the non-redemption HRM can obtain higher lifelong value change; (3) When the bequest motivation of the elderly is relatively strong, the elderly have correspondingly strong bequest preference. Participating in the HRM with redemption option can realize the option of retaining part of the heritage value and reduce the volatility of heritage loss. Therefore, the restriction of bequest motivation on the demand of the elderly can be reduced to a certain extent, which is more suitable for the retired residents with strong heritage motivation.