Living to 100: How Will We Afford Our Longer Lives?

Living to 100: How Will We Afford Our Longer Lives?

Retirement experts from around the globe convened on May 7 for an invitation-only, online symposium that addressed options for managing longevity risk. There was general agreement that America must prepare for a greater percentage of its citizens living to age 100 in the coming decades and that public-private partnerships that involve reverse mortgages, property tax deferrals, longevity bonds and annuities are potential solutions.

The symposiumManaging Longevity Risk: New Roles for Public/Private Engagement – was hosted by the Pension Research Council at Wharton and the Boettner Center for Pensions and Retirement Security and attended by 125 academics, financial service professionals, actuaries, plan sponsors and students.

“It’s well known that many, many older people have substantial home equity,” says Olivia S. Mitchell, Wharton professor of business economics and public policy and executive director of the Pension Research Council. “And yet it has been very difficult for them to access that wealth without moving out and selling the house. It’s also not something that older people necessarily want to do. Most older people would like to remain in their homes and age in place if they can. So, reverse mortgages are absolutely critical as a tool to help access some of that wealth.”

Despite their apparent attractiveness, reverse mortgages are not widely used, says Mitchell. Public-private partnerships could help in finding new ways for older Americans to use reverse mortgages. She pointed to Japan as an example, where some prefectures – or municipalities – have put in place innovative reverse mortgage programs for the elderly. Those programs make way for people to borrow against the equity on their home to retrofit their homes with railings or wider doors to accommodate wheelchairs and so forth, says Mitchell.

Read a full summary of the event at https://knowledge.wharton.upenn.edu/article/living-100-will-afford-longer-lives/