Do you have a back-up plan for retirement income?
An estimated 25 percent of Americans plant to keep working well into their 70s. But sometimes life is full of unexpected surprises, whether it be a health crisis, a job layoff, or a personal or family hardship, and many Baby Boomers find themselves retiring before they had planned to. Having a contingency retirement financial plan is a wise decision. Sixty percent of Baby Boomers do not have a backup strategy for retirement income if something were to prevent them from working until their planned retirement. But if you own a home with significant equity, and you would like to stay in your home, a reverse mortgage may provide an additional source of retirement income.
A reverse mortgage that is insured by the FHA is called a Home Equity Conversion Mortgage (HECM) and allows homeowners age 62 and older to convert a portion of their home equity into cash that can be used however you wish. A reverse mortgage is a loan, but borrowers don’t have to make a monthly mortgage payment; or if they choose to, they can pay whatever amount they wish. They are still responsible for paying property taxes, insurance, HOA dues, and maintenance.
More on Reverse Mortgages and Retirement Income
HECM borrowers can choose to receive their loan proceeds in a single lump sum payment, monthly payments, a line of credit, or a combination.
Considering retirement can span 30 years or more, it is easy to see why many seniors fear they may outlive their retirement income – especially if they have to retire sooner than planned. And since Social Security benefits increase approximately seven percent each year, a reverse mortgage can help a borrower delay drawing those benefits early, which helps extend their nest egg in the long run.
If you have experienced a sudden retirement much earlier than expected, a HECM reverse mortgage product may give you the additional income you need to finance your retirement. Speak with a Certified Reverse Mortgage Professional to help you understand the benefits of tapping into your home equity.
Learn more about how people are using home equity conversion mortgages for purchasing homes:
Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.