There is no guarantee that the money you have saved for your retirement will not be affected by the volatility of the stock market, especially with the impact of COVID-19 (also known as the coronavirus). When there are down cycles in the market, retirees may need to look at other sources of money; and, tapping into one’s home equity may be able to create a more stable financial outlook.
A study done by The Center for Retirement Research at Boston College showed Americans over the age of 65 often have more cash in their homes than in 401(k)s, IRAs or other investments. The average U.S. homeowner age 65-74 has $125,000 in financial assets. Similarly, those same individuals have an average of $150,000 in home equity. The difference increases to $115,000 in assets and $160,000 in home equity, between the ages of 75-84.1 For many retirees, much of their wealth appears to be in their homes.
For those senior homeowners looking for ways to preserve their portfolio during a down market, a reverse mortgage may be an option. However, we strongly advise that you speak with a Certified Financial Planner to discuss which solutions may work best for you and your family.
A reverse mortgage loan is available to homeowners aged 62 years and older. It allows borrowers to convert a part of their home’s equity into cash or as a line of credit that will grow over time.2 The proceeds from a reverse mortgage can be accessed on an as-needed basis. Borrowers also have the option to receive a lump sum payment (only available for fixed loans), ongoing monthly payments, or a set amount for a specific amount of time. Furthermore, a combination of these options can be used to meet specific retirement goals.
If you are a senior homeowner looking for a stable financial option during this economic time of uncertainty, call (800) 976-6211 to speak with a licensed reverse mortgage specialist.
1Center for Retirement Research at Boston College. Using Your House For Income In Retirement. http://crr.bc.edu/wp-content/uploads/2014/09/c1_your-house_final_med-res.pdf.
2 The reverse mortgage loan balance grows at the same rate as the available line of credit. The line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.