It is no secret that the baby boomer generation is entering retirement with troubling financial circumstances. On average baby boomers are carrying more debt, less savings, and fewer guaranteed retirement pensions than previous generations. Need proof? SEE HERE or HERE.
The Home Equity Conversion Mortgage (HECM), also known as a ‘reverse mortgage’, may offer a solution for those retirees who have not accumulated enough retirement savings but have substantial equity in their homes.
The Journal of Financial Planning has done a great job of devoting space to research around the topic of using reverse mortgages as a retirement tool. In the February 2017 issue THIS ARTICLE was featured in which the author compares the usage of a reverse mortgage to an immediate annuity as a funding vehicle.
For those interested in learning more about the basics of a reverse mortgage the author does a nice job summarizing key points in the section entitled ‘The HECM Product’.
In addition, through analysis the author finds that reverse mortgages can generate higher levels of retirement income for couples when compared to the income generated from an immediate annuity. The opposite is true for individuals.
I hope you find it an interesting read! Please feel free to contact me if you want to learn how a reverse mortgage can fit into your retirement plans.