Boomers Facing Retirement With Less Savings & More Debt

“Be faithful in small things because it is in them that your strength lies.– Mother Teresa  

BABY BOOMERS RETIRING WITH LESS SAVINGS & MORE MORTGAGE DEBT 

It’s no surprise that life expectancy is continuing to get higher today and baby boomers are expected to live longer than previous generations.

Experts predict a record number of boomers will be entering retirement in the near future and according to a report by the Stanford Center on Longevity entitled “Seeing Our Way to Financial Security in the Age of Increased Longevity”, they are heading into this next phase of life with less savings and more debt.

The report highlighted an increase in mortgage debt among older homeowners as a big concern pointing to data showing that in 2012, one-third of homeowners 65+ years of age were still paying off a mortgage – up from less than a quarter of homeowners in 1998. The amount owed on a mortgage has also nearly doubled from $44,000 to $82,000.

The report states:

 “Considering the vast size of the Boomer population, increased life expectancy, and the rate at which today’s Boomers are retiring, being ill-prepared for retirement has profound implications for the overall well-being of individuals, families, and society today and for generations to come.” 

But it’s not all bad news. Baby boomers have options for supplementing their retirement income and better preparing themselves for what should be their golden years. Leveraging home equity could be an ideal solution.

HOME EQUITY & RETIREMENT
As mentioned in my last email, senior housing wealth is at an all-time high, which presents a real opportunity for older homeowners.

For many people home equity represents the largest component of personal wealth and should be seen as an asset to consider in a comprehensive financial plan. Reverse mortgages can be a strategic way to tap into your home equity, pay off an existing mortgage and increase your retirement income.

Reminder of how a reverse mortgage mortgage works: 

  • Reverse mortgages are loans for people 62+ years of age that allow you to borrow against home equity without being required to pay a monthly mortgage payment.
  • You can continue to live in the comfort of your home.
  • Some of the equity in your home is first used to pay off any existing mortgages, and the remaining loan amount is converted to non-taxed cash that you may receive in a lump sum, a monthly disbursement, or a line of credit.

Senior Housing Wealth Hits an All-Time High

“There are no limits to what you can accomplish, except the limits you place on your thinking.
– Brian Tracy

The Highest Amount of Tappable Home Equity For Seniors Since 2000 

According to the National Reverse Mortgage Lenders Association’s quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), homeowners 62+ years of age have now amassed $6.97 trillion in home equity – with a growth of 1.4% over the 3rd quarter of 2018. And this trend shows no signs of slowing down.

The NRMLA RMMI hit 249.37, its highest mark since 2000 in Q2 with the NRMLA noting the increase was mainly driven by an estimated 1.7 percent increase ($143 billion) in senior home values, which was offset by a 0.8 percent or $12.8 billion increase of senior-held mortgage debt.

– HOME EQUITY –
ONE OF THE GREATEST ASSETS FOR SENIORS

“At a time when we’re seeing stock market volatility and the potential for a mild recession in the near future, it’s the perfect time for families to gather and take stock of their retirement resources and make necessary adjustments to ensure continued financial security,” said NRMLA President and CEO Peter Bell. “Housing wealth should be considered with other financial assets.”

For many homeowners, the equity they have built up in their home is their largest financial asset. There are a number of opportunities for senior homeowners to responsibly leverage their home equity and realize their vision for their retirement years.

More than a million senior homeowners have used a reverse mortgage to supplement retirement savings and age in place. This financial solution is a strategic way for older home owners, mostly retirees, who are no longer earning regular salaries but are spending down their savings, to access their home equity without having to increase their monthly expenses.