Despite AARP’s recommendation to make paying off housing debt prior to retirement a top goal, more Americans are retiring still burdened by mortgage debt—and a reverse mortgage might provide some liquidity, says the Times Union.
Carrying a mortgage into retirement only digs individuals deeper into years of accrued debt, suggests the article, citing insight from AARP and several financial planners.
The Times Union reports:
Paying off the mortgage before retirement has been the goal of generations of homeowners; some even celebrated with a mortgage-burning party. But an increasing number of households carry housing debt into their retirement years, according to the Federal Reserve’s Survey of Consumer Finances. Almost 1 in every 3 (roughly 29%) of retired households had housing debt in 2010. The median amount of retiree’s housing debt also tripled in that time, to about $61,000.
Even among the oldest households—headed by people age 75 and up—1 in every 5 had housing debt, up from 5.8 percent in 1989.
That means more households now head into retirement with high monthly payments, just at the time their incomes are sliding. AARP is not happy about the trend and recommends that homeowners try to pay off their mortgage before retirement.
“The more they can reduce their expenses when they’re not working, the better off they’ll be,” said AARP’s Jean Setzfand. “The mortgage payment is one thing that’s predictable, and a goal that people should work for, in terms of removing that expense from their ledger.”
Of course, retirees can always take out a reverse mortgage later against their home’s value, but those take time and often have large upfront fees.
Written by Jason OlivaPrint Article