Over the weekend, the Los Angeles Times published an article describing how retirees are no longer counting on home equity to get themselves through retirement.  Faced with falling home values and a struggling economy, many Americans are changing their retirement plans and looking at new options.

Retirees no longer counting on home equity covers a range of topics including downsizing their home, selling assets, postponing retirement by working longer and signing up for a reverse mortgage.  Each option has its challenges and risks.

Two of the options the author considers risky are reverse mortgages and selling life insurance policies.  Quoting experts such as AARP financial "ambassador" Jonathan Pond, who says reverse mortgages should be something of a last resort due to the high fees and complicated nature of the loans. 

The article does stress that education is key because of fears that reverse mortgage complexities could be used to trick seniors, but fails to mention that The Housing and Economic Recovery Act includes provisions to help address this concern.

However, it does say that the American Assn. of Residential Mortgage Regulators and the Conference of State Bank Supervisors established guidelines earlier this year to review lenders and brokers selling reverse mortgages.  The guidelines are meant to guard consumers against fraud and abuse, "such as the simultaneous sale of unsuitable investments or deceptive sales practices," according to a December news release from the groups.

Retirees no longer counting on home equity (LA Times)