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Most Older Americans Age in their Homes


Photo of a suburban house


Retirees are apparently unpersuaded that it’s a good idea to convert their substantial home equity into some retirement income.

One way to tap this home equity is through state programs that defer older homeowners’ property taxes. The programs are offered in many states, but very few people take advantage of them. Retirees are also skeptical about the benefits of converting their equity into income using a federally insured reverse mortgage: only about 50,000 older homeowners, on average, get them every year.

A big concern is that if they ever sell the house, the back taxes or the reverse mortgage must be paid back – with interest.

But a new study by the Center for Retirement Research finds that this is an unlikely scenario for the majority of retirees, because they rarely move or don’t move at all.

The researchers constructed a picture of how Americans’ living situations change between their 50s and the end of their lives by combining the data for two separate age groups. They matched the households in one group, who were between age 50 and 78, with similar but much older households in the second group and then followed the second group through most of their 90s.

The researchers found that 53 percent of this constructed sample of homeowners never moved out of the house they owned when they were in their early 50s.

Another 17 percent relocated around the time they were retiring and then generally stayed put. Although the households in this group tended to be more educated and better off financially than the people who never moved, both groups ended up with substantially more housing wealth than the people who moved frequently.

The frequent movers – 14 percent of the households in the study – had been through more financial hardships. They were more likely to have just one person in the couple earning money, and they had more children and experienced more unemployment.

The remaining 16 percent illustrate the wild card facing all retirees trying to plan for the future. Medical problems such as dementia or a physical impairment eventually forced many of them to move into a care facility, such as assisted living or a nursing home.

Older Americans overwhelmingly say in surveys that they hope to grow old in their own homes – and their actions back this up.

Their stable homeownership patterns indicate that tapping home equity could be an option for more homeowners, the researchers concluded.

To read the entire study, authored by Alicia H. Munnell, Abigail Walters, Anek Belbase, and Wenliang Hou, see “Are Homeownership Patterns Stable Enough to Tap Home Equity?”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

2 Responses to Most Older Americans Age in their Homes

  1. It is important for this group to proactively make their homes more “age-friendly” by such simple expedients as installing grab bars near the tub/shower, having railings at all outside steps (even just a few), having adequate lighting near inside stairs and removing scatter rugs. Preventing one fall is worth the effort.

  2.  Denise Clark says:

    Yes, but be careful. We are dealing right now with a mother whose home value is underwater due to equity loans (one acquired within the past two weeks!). The bank will be foreclosing within a year since she doesn’t have the income to support the debt load. An FHA reverse mortgage is worthwhile if one qualifies. Read Wade Pfau’s book on the subject for details.

    For discussion of this article, please contact the Go financial publisher and longtime Reverse Mortgage advocate, Warren Strycker, 928 345-1200.

Combine proceeds with sale of one home to buy a new home without a forward mortgage, a staircase to too many messy bathrooms and monthly mortgage payments.

So, you are at least 62, have a bunch of home equity and need to downsize. Too many bedrooms to clean, way more than enough bathrooms, stairways to climb — just too much maintenance and you’re tired of it. It’s just too much to do now.

Here’s a HECM idea to consider. Sell your home, get rid of a mortgage and the payments month after month, put the remaining proceeds in a line of credit that earns monthly income instead of monthly costs to use it.

Do it without monthly payments.

Lay back and relax. Your retirement just got a lot easier. Let’s talk about it.



Previously a HECM skeptic, Quinn began recommending reverse-mortgage

Originators and other players in the reverse mortgage industry say that they’ve seen a notable shift in the way Home Equity Conversion Mortgages are covered in the general media, and public-relations monitoring data backs up those observations.

The National Reverse Mortgage Lenders Association uses a third-party public relations firm to track mentions of HECMs in the news; during the period from August 2016 to the present, 36.9% of all reporting on reverse mortgages was positive, with neutral mentions accounting for a further 56.1% — and negative stories representing just 6.4% of the total.

These hard numbers reflect a trend that many in the industry have observed in recent years, particularly as respected news outlets such as the Wall Street Journal and Forbes have reported on independent scholarship from researchers such as Wade Pfau, Harold Evensky, Gerald Wagner, and Robert Merton.

Brett Kirkpatrick, a partner at Harbor Mortgage Solutions, Inc. in Braintree, Mass., said his clients frequently bring in clippings of positive reverse mortgage articles from outlets such as Forbes and the New York Times. This of course was not always the case: Kirkpatrick said general opinion suffered from an “echo chamber” of rumors and negative reports feeding off of each other for years,

The tide began to change within the last four years, with Kirkpatrick pointing to an August 2013 column by popular financial-advice columnist Jane Bryant Quinn as a key turning point. Previously a HECM skeptic, Quinn began recommending reverse-mortgage lines of credit for certain borrowers in their early 60s as a retirement strategy. Kirkpatrick also applauded the National Reverse Mortgage Lenders Association’s efforts to meet with members of the popular media and educate them about the finer points of HECM.

“Those articles are definitely reaching our clients and our potential clients,” Kirkpatrick said.

But despite the positive numbers, there’s still opposition in certain markets. Danny Phillips of Southchase Mortgage in Foley, Ala. says he frequently faces resistance from prospective clients who tell him that “they” say reverse mortgages are scams. He always has the same response: “Well, what’s bad about them?”

“They can never tell me,” Phillips said.

Phillips went so far as to reach out to the local NBC affiliate after one of its news programs ran a sensationalist story about a woman who faced a reverse-mortgage foreclosure. Phillips pointed out that the report was light on specific details, and used the terms “foreclosure” and “reverse mortgages” as a type of attention-getting scare tactic.

“There shouldn’t be any foreclosures,” Phillips said. “(But) people with forward mortgages get foreclosed on. That doesn’t stop anyone from doing a forward mortgage and buying a house.”

Phillips said that Southchase first concentrated solely on regular “forward mortgages,” but that he became interested in HECMs after his parents got older and needed help with money for their retirement. Even though Phillips’ mother ended up having to go through a foreclosure after she moved into a nursing facility and the property was slow to sell, Phillips said he still sees the benefit of reverse mortgages, and began offering them to his own clients.

He said any changes in the popular opinion of HECMs that he’s seen in his neck of the woods were due to his work making connections with local banks.

“It’s through my efforts,” he said. “I would love some help.”