We assume the interest rate on cash assets is the Australian bond return, and the interest rate on the growth assets is the Australian total equity return, both included in the SUPA model. [...] The parent’s CEV is defined as the fixed percentage increase in the parent’s annual consumption in the Baseline Scenario required to achieve the same utility gain as in the scenario under consideration. [...] In Scenarios 2 and 3 mentioned above, if the parent gifts the child a 20% first home deposit at time t “ 0, the portion of the gift exceeding $10,000 is included in the parents’ total assessable assets for the first five years of retirement. [...] Then, we present, as the main results, the effects of the scenarios and policy experiment defined in Section 2.7 on the parent, adult child and the family as a whole. [...] Main Results In this section, we present the main results of the paper, comparing the utility gains and losses for scenarios with different reverse mortgage and gifting strategies compared to the Baseline Scenario, where the parent neither uses a reverse mortgage nor gifts the child.
Authors
Yunxiao (Chelle) Wang; Katja Hanewald; Zilin (Scott) Shao; Hazel Bateman;
Related Organizations
- Pages
- 34
- Published in
- Australia
Table of Contents
- Introduction 2
- Two-Generation Lifecycle Model 4
- Utility Framework 5
- Model Structure and Timing 8
- Parent 8
- Child 10
- Economic Scenario Generator 12
- Mortgage Rates 13
- Superannuation, FOA and Taxes 14
- Model Parameterisation 16
- Disability and Aged-care Framework 18
- Scenarios and Policy Experiment 19
- Simulation Results 21
- Optimal Consumption Targets 21
- Main Results 23
- Policy Experiment 25
- Bequest vs Altruism 26
- Level of Altruism 26
- Further Sensitivity Analyses 28
- Conclusion 29
- Acknowledgements 31
