Blog

These days, people are living longer which, of course, is a good thing. But it also means retirees’ savings must stretch further to last throughout retirement. Throw in the recent surge in inflation, rising long-term care costs, and the unfortunate reality that many retirees are not financially prepared for retirement, and we have the makings of a retirement crisis ahead. 

On the bright side for older-adult homeowners, housing wealth has been on the rise. According to the National Reverse Mortgage Lenders Association (NRMLA), U.S. homeowners aged 62+ saw their home equity soar to a record $10 trillion in 2021. It can be prudent for homeowners and their advisors to discuss ways to incorporate housing wealth into retirement planning decisions. 

For your clients who are homeowners aged 62+, a Home Equity Conversion Mortgage (HECM, commonly called a reverse mortgage) loan offers some distinct advantages over other types of home-equity-release loans.

According to a survey conducted by Clever,* about half (51 percent) of retirees believe they will outlive their savings. Perhaps even more worrisome, the study also found that 65 percent of retirees say they are not financially secure. They may be facing any number of financial challenges, including how to best pay for long-term care or combat recent jumps in the prices of food, gas, and just about everything else.

As a financial professional, you want to give your clients the best chance at financial success. For most homeowners aged 62 and older, home equity represents the largest portion of their overall net wealth, usually dwarfing their other assets (e.g., retirement savings). While home equity is good, unless the home is sold or the equity is tapped, it is of essentially no functional value to a homeowner in retirement because it is generally very illiquid.