Few Retirees Plan to Use Home to Finance Retirement says Study

A new report from the Society of Actuaries says that despite the financial turmoil in recent years, American’s retirement concerns changed little from 2007.

Conducted through telephone interviews of 804 adults age 45 to 80 (401 retirees, 403 pre-retirees) in July 2009, the survey found keeping the value of investments up with inflation, income varying due to changes in interest rates, the affordability of health care and long-term care, outliving assets, and maintaining a reasonable standard of living were major concerns.

”The two principal concerns of both pre-retirees and retirees centered on the consequences of not being able to keep the value of their savings and investments up with inflation, and their inability to pay for adequate health care,” says the report.


When it comes to retirement economics, the report found that home values are an extremely important asset for older Americans. For those in the 25 to 85th percentile by asset values, non-financial assets (primarily home values) are 70 percent of total assets (excluding the value of pensions and Social Security).

Even though it makes up such a large percent of older American’s total assets, few currently plan to tap the equity to pay for retirement.

The survey results show that only about 16 percent of retirees and 20 percent of pre-retirees have already used or plan to use equity in their home to help finance their retirement.  If they do plan on using their equity, 45 percent of retirees and 56 percent of pre-retirrees plan to sell their home.  They are much less likely to access this equity through a home equity loan, or through reverse mortgages.


For those who have already used equity from their home to finance retirement, 45 percent accessed it through a home equity loan, thirty one percent sold their home, and fifteen percent used a reverse mortgage.

To view a copy of the report, see here.

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  • Well said.
    The challenge is definitely in front of us. In coming into the industry everyone claimed that the product sold itself. To hear such promotion was like listening to some of my fellow dorm residents waxing late into the night about how successful they would eventually be. Oops that is a bad example, since that came true for many of them, just not in their field of study.
    The portion of the senior market we have penetrated is the desperate homeowner. It would be great if 15% of all senior homeowners got reverse mortgages. Don’t count on it. We still have yet to demonstrate the usefulness of our products. That will take time.

  • Whatever percentage we have penetrated is surely not all the desperate homeowners. More likely just a small part of them. The problem is that so many of these desperate homeowners are now beyond our help. This report is over a year old.

  • Well said Critic. The challenge is definitely in front of us and it hasn’t changed yet. Until we, as an industry, can show the consumer and the financial advisor community that the reverse mortgage deserves the same amount of consideration as any other component of a retirement plan we will have a rough road in front of us.

    I am very familiar with this study and it clearly showed that “outliving their assets” was one of the senior’s largest concerns. One would think the reverse mortgage may be an option for many of these seniors but until we can prove to the masses that this is just not a “product of last resort” but a mainstream product that can be incorporated into an overall retirement plan we will grow very slowly.

    Education, education, education….

  • Have that company make those calls now- lets see the updated results. I agree with all that is said- unfortunately even our referral partners: attnys, accountants, financial planners still think they are smarter. Until they themselves see the product in action they won’t believe its plausible.

  • This is a small study so hard to read too much into it, but notice that 3 TIMES as many seniors used traditional HELOCs (45%) rather than reverse mortgages (15%) to access their home equity. The market of “non-desperate” borrowers is out there and bigger than what we’ve been selling to for 20 years.

    The HECM Saver should be directly targeted at these borrowers, but there’s a big education hurdle with consumers and financial advisors/planners/etc. to get there.

    • John,

      I must have misunderstood the categories. I thought they were grouped by those who have done a particular act OR are considering doing it.

      Your points on a larger market than just the desparate, Savers, and the education hurdle are well taken.

  • What’s interesting is the breakdown of the responses. Obviously those surveyed don’t understand the difference between a home equity loan or a reverse mortgage as it applies to funds at retirement.

    Also, the “something else” and “don’t know/refused” responses tend to leave me thinking overall there is a high degree of both misconceptions and confusion out there.

    As with any financial instrument, the biggest challenge is going to be properly educating the consumer and their advisors.

  • Mr. Michael Banner and Mr. John Lunde are correct about the education issue. I do not believe that our traditional “reverse mortgage education” is sufficient when it comes to leaping “the education hurdle.” I also do not believe that the vast majority of reverse mortgage originators are prepared for “this sporting event.”
    The type of marketing needed requires a discipline about learning the needs of the clients of these professionals through careful listening and, yes, additional training. We will need to present ourselves as problem solvers providing examples and ideas but without meddling into their clients unless asked to do so. This is no simple task and will require a breadth of knowledge and understanding not prevalent in the current originator core.
    Mr. Banner has a unique approach which stands out in the industry. As he has stated before on this website, he sells continuing education to targeted groups within the financial community. He has been doing it successfully for some time. His efforts are focused in this area as he prepares for the future. Another marketing expert to the financial community emphasizes the benefits of the cash management aspects of reverse mortgages. As a result he focuses on the adjustable rate products. I am sure he and his firm will excel with Savers.
    When it comes to reaching out to the financial community with any degree of success at all, only a handful of originators come to mind. Some lenders have been spending months attempting to perfect an approach. In the view of one of these professionals, at least one of these approaches has emphasized discipline over new “educational substance.”
    While one can argue the merits of the different approaches, it is learning to leap “the education hurdle” which our firm will be emphasizing. The goal we all share is finding and “mining” rich veins of referrals within the financial community. As to product we have never been better equipped since the heyday of proprietary reverse mortgages.
    While NRMLA has been providing sessions on reaching the financial community off and on for some time, for the short run now seems to be the time to be emphasizing this topic even if it is to the exclusion of other more traditional topics. NRMLA has always proven to be flexible and will no doubt meet member needs in this regard. Seeing their current speaker lineup, they should be able to bring the best available speakers on “mining” the financial community to their road shows and conventions.

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