If you’re like most retirees you probably pictured your retirement years spending your time doing the things you enjoy – more time with family, hobbies, travel, living comfortably in your home, and so on. But can you afford to live your post-paycheck life the way you always hoped?
According to research from the National Retirement Risk Index, more than 50 percent of households do not have adequate retirement funds to preserve their pre-retirement standard of living — even if they work until age 65. It’s a scary statistic, but fortunately, you have options to help supplement your savings. For senior homeowners, those options could be in the walls around you.
Financial planning experts and academics from The American College, Boston College, Columbia University, and MIT, agree that incorporating home equity into a retirement plan helps savings last longer. A popular option to incorporate in your retirement plan is a reverse mortgage:
A reverse mortgage loan allows homeowners age 62 or older convert part of the equity in their home into a usable asset, without giving up title or ownership of the house. According to Professor Wade Pfau of The American College, “the reverse-mortgage option should be viewed as a method for responsible retirees to create liquidity from an otherwise illiquid asset.”
Reverse mortgages are attractive to seniors, in part, because they require no monthly payment and do not have to be paid off until the last borrower permanently leaves the home. You have the option of taking the loan proceeds as a lump sum, a fixed monthly or tenured payment, a line of credit, or a combination.
New consumer safeguards for reverse mortgages are fueling their popularity among seniors who want the benefit of no monthly payment, a loan that can’t be canceled or reset1, and the option of a line of credit that increases over time.
In addition, reverse mortgages are non-recourse loans that protect you from ever owing the lender more than the value of your home, even if the house is “underwater” when you are ready to sell.
If you’re interested in learning more about a reverse mortgage, contact us at 800.218.1415 and we will guide you through the features and responsibilities, and the process for obtaining one.
3 ways your home value can help in retirement – Southernminn.com, 4/1/2016, http://www.southernminn.com/online_features/senior_living/article_2bffc24b-560a-5617-9fbf-d61d00538178.html
You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.