American face a slew of financial challenges on the road to retirement. But as retirees plan to rely on Social Security and personal savings to fund their non-working years, a recent Forbes column says one particularly underused asset can be a “saving grace” for many people: home equity.
While Social Security is by far the largest retirement income asset of the average American, other major sources of wealth must also be considered, and that includes using home equity via a reverse mortgage, suggests Forbes contributor Jamie Hopkins, assistant professor of Taxation at the American College.
“The lack of focus on home equity in retirement income planning is nothing short of a complete failure to property plan and utilize all available retirement assets,” Hopkins writes. “This needs to change immediately because strategic uses of home equity, especially reverse mortgages, could save many people from financial failure in retirement and help stem the overall retirement income crisis facing Americans.”
Home equity can be effectively used as part of a retirement income plan to “dramatically improve one’s financial security,” Hopkins notes, and there are a number of ways to tap into this asset, including via selling one’s home, taking out a home equity line of credit or securing a reverse mortgage.
“While there are a variety of ways to utilize home equity as part of a retirement income plan, reverse mortgages deserve special attention and consideration,” Hopkins writes.
Unfortunately, misperceptions of reverse mortgages long-held by consumers and the general public have hindered the product’s popularity and utilization growth. But given the retirement picture facing Americans today, it is time for these perceptions to change.
“Individuals and industry leaders need to better understand how reverse mortgages cane effectively used,” Hopkins writes. “A more widespread and better understanding of reverse mortgages strategies needs to occur in order to better serve America’s senior population and retirees.”
Read the Forbes column.
Written by Jason Oliva