Homeowners taking out reverse mortgages are using the loans wisely, according to a survey by RBS Reverse Mortgages.
Less than 10 per cent of those taking out a reverse mortgage used the equity in their homes to pay for 'luxury' items such as holidays and hobbies.
Instead, most say they used the money to fund necessities such as home repairs or supplement their income.
RBS Reverse Mortgages' Martin Lynch said the findings discredited what has come to be known as the SKI (Spending Kids' Inheritance) myth.
"People thought (reverse mortgagees) were spending the money on luxuries, and that was really not the case, and that they were just going nuts without any thought to their future aged-care needs," he said.
Reverse mortgages allow people over 60 to borrow against the value of their home, with payments and interest not due until after death, or when they sell the property.
When the concept was introduced in Australia in 2005, there was some controversy about the effect it would have on inheritance.
The survey found that the biggest use (32.6 per cent) for Australians with a reverse mortgage was for minor home repairs.
The second-highest use (18.7 per cent) was to provide the retiree with a regular income.