According to the 2018 Retirement Savings Survey, 56% of Americans have less than $10,000 saved for retirement1. Although many of the respondents in the younger subgroups had less money saved which may skew this percentage, 28% of those age 55 or older reported having no retirement savings at all.
However, living comfortably during retirement has a different definition depending on who you ask and a static dollar amount may not be an accurate benchmark. In a separate study, only one third (32%) of retirees felt very confident in their ability to live comfortably throughout retirement 2. The Retirement Confidence Survey, the longest-running national survey of its kind performed by the Employee Benefit Research Institute (EBRI), explores the retirement outlook of those already retired (Retirees) as well as employees still in the workforce (Workers). Some key findings:
How A Reverse Mortgage May Help
A reverse mortgage is a loan available to senior homeowners age 62+ which allows them to convert a part of their home’s equity into cash or a line of credit. Many borrowers use a reverse mortgage simply to pay off their current mortgage loan. This eliminates their monthly mortgage payment and can provide extra cash flow throughout their retirement.3 Funds can be used to cover daily expenses, medical bills, or even long-term care. In addition, it can help supplement income whether you choose to continue working or not.
Borrowers with significant equity in their home may also be eligible to receive substantial funds3 that can be used for retirement planning through:
A combination of these options can also be utilized to meet specific retirement goals. If you are a senior homeowner, a reverse mortgage may be a smart solution to add to your retirement plan.
12018 Retirement Savings Survey: https://www.gobankingrates.com/retirement/planning/why-americans-will-retire-broke/
22018 Retirement Confidence Survey: https://www.ebri.org/pdf/surveys/rcs/2018/2018RCS_Report_V5MGAchecked.pdf
3The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance. The borrower must live in the home as their primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
4The 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.