Demographic aging is a trend that characterizes almost all Western countries, including the Republic of Croatia. The pension systems are facing difficulties of constant decrease of the number of employed people from whose salaries current pensions are paid, while the life expectancy is simultaneously increasing, just like the number of pensioners. Also, the healthcare systems have their own difficulties. Technological advances and a growing number of elderly people are causing increased health care costs, which for many people become too expensive to afford in retirement. For the above reasons, society and individuals are obliged to find solutions to the existing problems so that pensioners can have a dignified life after the end of their working life. One of the solutions to the mentioned problems is a reverse mortgage – a financial instrument for financing elderly people who own their own real estate. The reverse mortgage is a relatively new financial product that is used more intensively since the 1980s in the United States of America, where it is still used the most. A widely used description of a reverse mortgage is „a loan that is not repaid during the lifetime“ that describes its main core. Borrowers can usually sign a reverse mortgage after the age of 62 and they receive money based on the value of the real estate, which they are not required to repay until the end of their lives or until they move out from the real estate. Creditors are charged from the value of the real estate after closing the contract. This way of financing the growing costs of the elderly is suitable for societies with a high share of real estate ownership, such as the Republic of Croatia. The aim of this paper is to show the financing options for the elderly that this product offers, along with the advantages and disadvantages which are important to know. In addition, the potential of reverse mortgage application on the financial market of the Republic of Croatia is also described.