Research Monographs

Efficient Use of Reverse Mortgages for a Stable Life in Old Age

Efficient Use of Reverse Mortgages for a Stable Life in Old Age

  • Author

    Baek, Hyeyoun

  • Publication Date

    0000

  • Pages

  • Series No.

  • Language

As much as life expectancy has become longer by the speed of unprecedented population aging in Korea, a life after retirement is gradually getting longer. Despite the establishment of a multi-pillar structure of old-age income security in order to solve the personal and social risks, there are still limits to this system. The high level of elderly poverty rate and the security income level of the public pension which is expected to decrease continuously are in line with the limitations that the current multi-pillar structure of old-age income security system reveals. These limitations raise the importance of seeking alternatives to ensure the old-age income security of current and future elderly generations in a more realistic way. Therefore, institutional improvement is required to supply the appropriate level of old-age income systematically. On the other hand, recalling that the structure of asset ownership in Korea, where the proportion of real estate assets is relatively higher than financial assets is particularly prominent in the elderly, the current reverse mortgage is of institutional significance in terms of corresponding to the condition of this asset ownership structure. However, in spite of this significance, it is still insufficient in terms of activation of the system. This research contains a systematic review of measures to utilize the reverse mortgage in order to provide stable old age income security, along with the limitations of the current multi-pillar structure of old-age income security system and future discussions on the improvement direction. The number of participations is increasing year by year, but the current participation rate is insignificant. Therefore, this study discusses the economic effects that may be able to arise from the increase in the participation rate of reverse mortgage, as well as the characteristics of the current participants of reverse mortgage. In addition, this study suggests ways to improve the guarantee rate system of reverse mortgage in order to enhance the old-age income protection and to utilize the contracted house more efficiently from the viewpoint of housing welfare. The results of this study are expected to be used effectively in improving the reverse mortgage in more practical terms. Furthermore, it is hoped that the reverse mortgage will be revitalized effectively in terms of enhancing the function of old-age income security. 

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