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.
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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.