Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108AGING IN THE 21S T CENTURY 64 use of reverse mortgages, the mean ratio of home equity to home value is 0.90 overall. Housing wealth only appears to grow more illiquid with age: the home equity to value ratio grows from 0.84 for those aged 60 to 70 in 2004 to 0.96 for the oldest old. For homeowners with a high level of illiquid home equity who are likely to use that equity only when absolutely needed to pay for OOPM costs and the transition to long-term care, the benefits of annuitization and LTCI are minimal since home equity serves as a reasonable substitute, especially for risk-averse households. Coronado et al. (2007) evaluate differences in the value of housing as a share of the retirement portfolio across two cohorts, the original HRS participants and the Early Baby Boomers. Boomers have more valuable homes but are more likely to have borrowed against that value than earlier cohorts. Nonetheless, they have similar home equity as the earlier cohort. They are more likely, however, to consider home equity as a financial asset for spending in retirement. In the 2002 wave of the HRS, the health insurance section asked participants, “Not including government programs, do you now have any LTCI that specifically covers nursing home care for a year or more, or any part of personal or medical care in your home?” Li and Jensen (2012) use longitudinal information on this question and other information on health insurance in the HRS from 2002 to 2008 to study the prevalence of LTCI usage, why and how often individuals let LTCI policies lapse, and the welfare implications of lapsing. Those holding LTCI have higher education and income compared to the general US population. However, those who let their policies lapse are more likely than those who retain their poli- cies to be non-White and living without a spouse, with lower education and income, and in worse health. OOPM expenses are higher among lapsers than non-lapsers. The policies themselves that are more likely to be dropped are less comprehensive. Interestingly, those with lapsed policies are more likely to answer “unknown” or “uncertain” to questions about their policy. Taken together, these findings suggest that some households lack full information about LTCI policies and may experience a kind of buyer’s remorse. Some retirement pensions can be paid to pensioners as a lump-sum. Others, such as annuities, are paid out regularly in fixed amounts for life. Some firms only provide mandatory annuitization. It is well-known that wealthier individuals live longer than poorer ones. In general, this means that mandatory annuitization can end up shifting resources from those who die at younger ages, who will be poorer, to those who are longer- lived and richer (Gong and Webb 2008). Compared to no annuitization, though, most individuals will benefit from some level of annuitization. They calculate the value each household would place on annuitization based on how long the husband and wife expect to live, the household’s degree of risk aversion, and amount of annuitized wealth. Nearly 17% of households would not receive any benefit from mandatory annuitization. This percentage is even higher for those with low socioeconomic status. Those holding long-term care insurance have higher education and income compared to the general US population Boomers have more valuable homes but are more likely to have borrowed against that value than earlier cohorts.