It is no secret that when people hear the term “Reverse Mortgage,” they usually tend to reject or shy away from it. Is it the name or the actual product that causes them to turn away? Much discovery has lead to the conclusion that it is most definitely in the name.
In fact, Nobel prize-winning economist and finance professor at MIT’s Sloan School of Management, Robert C. Merton, states that “Americans have wrongly steered clear of a Reverse Mortgage“ even after studies indicate the numerous benefits of the Reverse Mortgage in a retirement income plan.
According to 2011 U.S. Census data, the average American couple’s (at age 65) home equity is more than two-thirds of their total wealth. The median net worth for married couples who are 65 and older is $284,790. How much of this amount is in their home equity? At least $192,552. The other estimated $92,238 is found in non-equity assets, including IRA’s, savings, and personal property. This proves that many retirees are facing a retirement income shortfall.
American College of Financial Services professor, Jamie Hopkins, emphasizes that “if many Americans who face a retirement income shortfall have much more home equity than IRA or 401(k) savings, incorporating the Reverse Mortgage into a retirement income plan makes sense.” Reverse Mortgages deserve a hard look because many retirees remain in their home in retirement, and need more retirement income.
Another reason to consider the Reverse Mortgage is that it offers payout flexibility to borrowers. For example, through the line-of-credit, the Reverse Mortgage can be accessed when the need arises. Best of all, the money grows when left in the account so that there is more money available in the future.
Since the Reverse Mortgage is a federally-insured product, the government has made frequent adjustments to the regulations and program within the past decade. In part, the provisions focus on streamlining the product so that it is simpler and less expensive. With protections made for non-borrowing spouses and other aspects of the loan, borrowers can feel at ease after deciding to look into it.
When people receive the right education on a Reverse Mortgage, they can make the best decision for themselves on whether or not it is for them. They know now that this is a product designed to be an excellent tool for increasing one’s retirement income.
Ready to explore the possibilities of how a Reverse Mortgage can change your retirement income? We invite you to give us a call today at 1-800-420-5515 so that our dedicated and knowledgeable professionals can further educate you about the product, and how it can increase your retirement.