Retire In-Home: A New Way to Use a Home to Guarantee Retirement Income

A. Muralidhar
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引用次数: 1

Abstract

There is a growing retirement crisis and most of the focus has been on the fact that individuals are not saving enough for retirement, may not have access to pension schemes, and find it difficult to choose from a wide range of retirement products. One solution that has been considered is to improve access to Reverse Mortgages (RMs) so that individuals can convert their (possibly) single largest asset into a through-death income stream. However, current RMs are complex with constraints on who can use them, and with multiple parties to the transaction to hedge residual risks. As a result, a limited number of institutions (and that too with government support) offer such products. These challenges may have also limited the use of RMs for the typical individual saving for retirement and are unlikely to solve the larger crisis. We suggest a new approach - “Retire In-Home” (Retire through Income from one’s Home) - that leverages recently proposed tradeable instruments to improve retirement security and hedge against standard-of-living risks. These include a bond called BFFS/SeLFIES, designed to secure real retirement income for a fixed term (with potentially a second new bond, called a LIVE bond, designed to protect individuals against longevity risk if individuals do not want to purchase deferred annuities because of annuity challenges). Further, the paper also shows how a new investor segment could be tapped to expand financing for such transactions as recommended by Prof. Robert C. Merton. This paper demonstrates how Retire In-Home could simplify this market and allow even the most financially unsophisticated individual to participate in this transaction. The paper works through three cases: (a) when death is known (or a term income); (b) when longevity risk is hedged with deferred annuities; and (c) when longevity risk is hedged with LIVE Bonds. The paper concludes with extensions including accounting for up-front lumpsum payments, forward-starting contracts and even multi-occupant situations.
居家退休:用家来保证退休收入的新方法
退休危机日益严重,人们关注的焦点大多集中在个人没有足够的退休储蓄,可能无法获得养老金计划,而且很难从众多的退休产品中做出选择。一个已被考虑的解决方案是改善获得反向抵押贷款(RMs)的途径,这样个人就可以将他们(可能)最大的单一资产转换为一笔终身收入流。然而,当前的rm很复杂,对谁可以使用它们有限制,而且交易中有多个参与方来对冲剩余风险。因此,提供此类产品的机构数量有限(而且也得到了政府的支持)。这些挑战也可能限制了典型个人退休储蓄的rm使用,并且不太可能解决更大的危机。我们建议一种新的方法——“在家退休”(通过家庭收入退休)——利用最近提出的可交易工具来提高退休保障和对冲生活水平风险。其中包括一种名为BFFS/自拍的债券,旨在确保固定期限的实际退休收入(如果个人因为年金挑战而不想购买延期年金,可能会推出第二种名为LIVE债券的新债券,旨在保护个人免受长寿风险)。此外,本文还展示了如何利用新的投资者群体来扩大此类交易的融资,正如罗伯特·c·默顿教授所建议的那样。本文展示了居家退休如何简化这一市场,甚至允许最不懂财务的个人参与这一交易。这篇论文研究了三种情况:(a)当死亡是已知的(或一项长期收入);(b)使用递延年金对冲长寿风险;(c)使用LIVE债券对冲长寿风险。论文的结论是扩展,包括会计前期一次性付款,提前启动合同,甚至多占用情况。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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