Reverse Annuity Mortgages as a Source of Retirement Income

Abstract

According to the recently published Report of the Special Senate Committee on Retirement Age Policies (Retirement Without Tears), 'one of the goals of social security policy respecting the elderly should be to enable them to remain in their own homes to the maximum extent possible.' Unfortunately, many elderly homeowners face the following dilemma. Either they retain full ownership of their house and accept a low retirement income, or they sell their home in order to generate a higher retirement income and move to rented accommodation. Reverse mortgages would allow these individuals to convert some of the equity embodied in their homes into a steady stream of income without giving up residence there. This paper discusses reverse mortgages and assesses their possible role in Canada's retirement income system.