Older Americans Have Home Equity, But Still Worry About Retirement

March 26th, 2017

A pair of recent surveys reveal the facts that many in the reverse mortgage industry know all too well: Seniors worry about how they’ll pay for retirement, don’t have pensions, and are sitting on significant quantities of home equity (some of which can be turned into cash contributions to living expenses).

Perhaps the most interesting revelation in the Employee Benefit Research Institute’s annual Retirement Confidence Survey, however, is the disparity between those who are approaching retirement and Americans who have already exited the working world. According to the institute’s data, about 60% of active workers in the United States feel confident that they can fund a comfortable retirement, while nearly 25% are “not too confident” and 16% are “not at all confident.”

That’s a significant contrast from the optimism among the already-retired set, 79% of whom feel very or somewhat confident that they’ve properly planned for a financially comfortable retirement; a full third reported feeling “very confident,” while only 8% said they weren’t confident at all.

This gulf pervades the group’s findings, with consistently higher sentiment about a variety of retirement planning topics — including the ability to pay for basic needs, medical expenses, and long-term care — among retirees than active workers, though even retired Americans had a great deal of concern about the latter metric: Almost half reported being “not too or not at all” confident about covering nursing home or home health care expenses in retirement, compared to 57% of those still in the workforce.

Meanwhile, a separate report issued by the Department of Health and Human Services’ Administration on Aging — “A Profile of Older Americans: 2016” — illustrates the vast amount of home equity in the hands of adults over the age of 75. According to the HHS report, which reflects data through the end of 2015, a full 76% of Americans in that age group own their homes, but median income among that cohort was only $31,000 per year. Of the age-75-and-up folks who owned their homes in 2015, 78% of them had no mortgage and owned their homes free and clear.

Americans in that age group tended to own older homes — with a median construction year of 1969, as compared to the overall median of 1978 — but interestingly, only 3.5% of those homeowners reported “moderate to severe” problems with regular upkeep, such as plumbing and heating systems. Those homes had a median value of $150,000, as compared to a median original purchase price of $53,000; for the overall population, those numbers were $180,000 and $127,000, respectively.

Among all Americans older than 65, including both homeowners and renters, the median income in 2015 was $31,372 for men and $18,250 for women, with only 21% of those reporting incomes of more than $50,000 — and 15% with incomes of $9,999 or less.

These stats plainly illustrate that home equity remains a vital potential source of retirement funding for older Americans. The lingering question for those in the reverse mortgage industry, though, remains how to convince a larger percentage of them that tapping into it can often be a prudent retirement option.

Quick hits

Both reports are worth checking out in full, but if you don’t have time to wade through the impressive amounts of data, here’s a bite-size encapsulation of some of the more interesting facts from each.

34% The increase in the 60+ population in the United States between 2005 and 2015, from 49.8 million to 66.8 million

69% Americans with a retirement plan who feel very to somewhat financially secure

32% Those without a plan who feel the same way

98 million The projected amount of Americans aged 65 and older in the year 2060

8.8% Percentage of older American below the poverty line in 2015

19.4% Proportion of people 65 and up in Florida, the highest in the country; nationally, that number is 14.9%. Only six other states had a percentage of 65+ residents greater than 17.0%: Maine, Vermont, Pennsylvania, Delaware, West Virginia, and Montana.

47% Percentage of workers who report less than $25,000 in retirement funds, including savings and investments

24% Workers who have less than $1,000 of any kind of retirement savings

Those interested in pursuing a FREE HECM ANALYSIS can proceed to the navigation bar “CONTACTS” and ask for one. The “ride” is free of cost and obligation, but the results will give/offer your own personal review of the facts. (Gofinancial.net — Warren Strycker).