Ideas for Retirees

New research from The American College of Financial Services, The Home Equity and Retirement Income Planning Survey, found that the overwhelming majority, 83 percent of Americans nearing or in retirement, want to remain in their current home for as long as possible. Additionally, the desire to remain in one’s home increased with age. Perhaps somewhat surprisingly, not only did the desire to remain in one’s home increase with age, but the number of years the respondent expected to remain in the home also increased with age. Even if the homeowner needed to relocate later in retirement, almost none of the respondents expressed a desire to rent.

Most retirees expressed the desire to age in place, less than half had really considered any strategies to leverage their home equity as a retirement income source. Since most retirees were not set on leaving the home to their heirs, they may be open to the possibilities of using home equity as a retirement income tool to support the goal of aging in place. However, only 49 percent of the respondents had a comprehensive written retirement plan in place and many of the respondents who had financial advisors, 40 percent, did not have a comprehensive written retirement plan. A good comprehensive retirement income plan should take into account where the retiree wants to live in retirement and should also discuss home equity as either an income or legacy tool, depending on the individual client’s goals, desires, and needs. Doing some homework on the potential advantages of using home equity in retirement would benefit retirees and their advisors, especially if aging in place is the desired outcome.


Source: Net Worth Data from U.S. Census Bureau, Survey of Income and Program Participation, 2008 Panel, Wave 10; Present value of Social Security benefits based on a worker with $60,000 of wages, and a same aged nonworking spouse. The worker's PIA is estimated at $1,557 (calculated using the Social Security Quick Calculator). Benefits are claimed at 66 and the worker dies at 84 and the spouse at 89. Present value was based on a 0% real rate of return (a current approximation of the risk free rate of return)

Author: Joe Farro

We have created a unique process to evaluate your mortgage needs and assist you in determining the right mortgage. Our Home Express Mortgage Plan is the answer to your home loan needs. This blog discusses the many topics surrounding mortgages and the housing market.

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