Reverse mortgages have an image problem story in Investment News written by Mary Beth Franklin. A rose by any other name may smell just as sweet, but when it comes to a home equity loan, one that is labeled “reverse mortgage” just plain stinks.
That’s the conclusion of new research released Wednesday by the National Council on Aging (NCOA), a nonprofit advocacy group supporting older adults. Like it or not, finding ways to unlock home equity may hold the key to retirement security for many aging baby boomers.
The research was designed to gauge the interest and understanding of home equity products by both older homeowners and financial advisers. It included comprehensive surveys of more than 250 financial advisers and more than 1,000 older homeowners ages 60-75, plus focus groups with 112 consumers. It turns out that both consumers and advisers are equally uninformed about the nuances of the various ways to tap home equity.
More than 90% of older consumers worry about rising medical costs in retirement and more than 80% worry about outliving their retirement savings, according to the research. Yet when considering financial preparedness, consumers focused primarily on accumulated assets such as 401(k) accounts, pensions, annuities and savings. Even though their homes can represent as much as 80% of their net worth, older people generally overlooked or were unwilling to consider home equity as a retirement asset. Read on
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