The process of demographic aging of the population has a major impact on the quality of life which is then manifested through low pensions which are resultat of the unsustainable pension system. On the other hand, increasing allocation of budgetary resources by the state with low incomes of citizens have an effect on the high social insecurity of the elderly population. The subject of this paper is the reverse mortgage model and its potential as a financial instrument for the elderly people. This is a specific group of citizens whose standard of living is low and the available financial resources are often insufficient to cover basic living needs. Due to the strict credit conditions set by banks, this group of people is often unable to meet these strict credit conditions which causes their financial exclusion and social insecurity which inevitably puts them in a bad position. A reverse mortgage is an alternative way of financing by which elderly people have access to capital without the need to refinance or sell their homes and they receive available financial resources that allows them to improve their standard of living with a guaranteed right to stay in their own home. The aim of this paper is to determine the potential for the development of the reverse mortgage model in the Republic of Croatia as an instrument for financing the elderly people. The content of this paper is elaborated through five chapters. The first chapter is an introduction to the paper which defines the subject and the goal of this paper, data sources, methods of collecting and the structure of the paper. The second chapter theoretically elaborates the basic features of the reverse mortgage model through the advantages, disadvantages, forms of the model and the methods of disbursement. The third chapter of the paper presents an analysis of the importance of the reverse mortgage and its role in ensuring an adequate standard of living for elderly people. The fourth chapter explores the possibility of developing a reverse mortgage model in the Republic of Croatia.