Home Investing Reverse Mortgages: A Retirement Plan for Qualified Homeowners

Reverse Mortgages: A Retirement Plan for Qualified Homeowners


There’s no question about it: Many Americans are in financial trouble by the time retirement comes around. They have not saved enough; they have no particular asset of great value that they want to lose or sell. The numbers, in fact, are startling.

Let’s start with the goal. It’s said that by the time you hang up your spurs, at age 60, you should have seven times your annual salary tucked away in a savings plan somewhere, be it in stocks and bonds, property or in a savings account at the local bank.

Of course, there are many reasons you could fall short on this goal. Some of those reasons may be self-inflicted and others may not.

You could simply have never gotten that great job that allowed you to put money aside in the first place. Facts are facts: According to the Economic Policy Institute, reports CNBC, the median savings for wage earners between age 56 and 61 – right on the cusp of retirement – is $17,000. That generally means that if all income stopped, those people would be flat broke within a year or less, based on reasonable standards of living.

Yes, it could have simply been the Great Recession that slammed your stock portfolio or forced you into early retirement through the loss of a job. According to this website, you could have simply overextended yourself in insignificant ways that simply add up after 50 years of working. You could be over-paying fees at the bank or subscribing to too many magazines and newspapers. You could simply have bought a house bigger than necessary, forcing you to pay extravagant bills for every-day items, such as gas and electric bills or yearly bills, like school taxes.

So, what do you know about a reverse mortgage and how that can simply rescue your retirement to the point that you can stay in your home and actually see a monthly stipend that comes from your home’s equity? Have you seen a reverse mortgage guide that can walk you through the basics and show how promising this could be?

Critics say there are few financial blessings out there, just lying around waiting for you to arrive on the scene. Your parents said, “If it seems too good to be true, then it probably is.” Reverse mortgages – sensible, legal, arranged through a reputable financial institution – are the exception to that rule. This is not money from the skies – this is your money that is represented by the equity in your house that you cannot access through standard channels. If you own a $100,000 home and you need cash one day, you cannot go out and sell that second bedroom you no longer use and come home with a bag of groceries.

Yet, that second bedroom and the rest of your house does represent a substantial investment. Banks recognize this and have worked out a system through which they pay you a stipend based on the equity you own. Is this free? In a sense, yes, because this is not income, so it is not subjected to tax. But the downside on the deal is that you are subtracting from your equity. When you sell the home or put it into your will, what you own is worth less, as the stipend transfers that much equity from your hands to the bank. But, what about this: You are 65 years old and must retire. You have lived in your home for years and still believe you want to stay there for another 10-15 years. You have enough savings in the bank to survive for a year by severely cutting back on all your expenses. After that, you don’t know what you will do.

A reverse mortgage is that game changer. You get to keep your house and you get some much needed cash to spend. You get to stay put. You stay safe and secure and have funds at your disposal. If this sounds too good to be true, do a search online for the U.S. Consumer Financial Protection Bureau, the federal agency that acts like the Consumer Protection Bureau, but for financial matters. Find the website search option and type in “reverse mortgages.” Do your own research. Double check and ask all the questions you need to ask.

David Author
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