It is no surprise that Social Security is the largest retirement income asset of the average American senior. As baby boomers enter retirement age, it is expected to supply more than 50% of income for about two-thirds of Americans in retirement. With such dependency on this single source of income, many Americans may be ill-equipped to handle future changes to these benefits.
While one remaining typical source of wealth includes the usual personal retirement savings, another possible income source is largely ignored, according to a recent article from Forbes.com.
The author points out that lack of focus on home equity as a retirement income planning tool is an oversight that needs to change in order to save many people from financial challenges in retirement. The article continues to describe that utilizing a reverse mortgage loan is one such strategy that deserves special consideration.
Reverse mortgages, specifically the government-insured Home Equity Conversion Mortgage (HECM), are home equity loans that help “retirement-age homeowners ‘age in place’ in a familiar setting where convenience and long-term relationships contribute to a preferable quality of life,” says ReverseVision President and CEO John Button.
The article outlines four techniques where reverse mortgages can be strategically used to improve a retirement income plan:
However, though experts such as Nobel Prize–winning economist and MIT professor Robert C. Merton endorse this loan, many consumers still hold reservations about them. Gaining a better understanding of how a reverse mortgage works can clear up any misconceptions the public may have, and provide a way to save America’s senior population from a potential housing crisis.
Strategic uses of home equity should be considered as a part of every homeowner’s comprehensive retirement income plan. Home equity may also serve as a saving grace for many baby boomers facing a retirement income shortfall, the article states.
Learn more about what a reverse mortgage is and how it can help you by contacting a licensed American Advisors Group reverse mortgage professional at 1-888-998-3147.