20% of Pre-Retirees Plan to Use Home Equity for Retirement, Study Says

A study focused on retirement planning risks found that about two out of 10 retirees and pre-retirees have already used or plan to use equity in their homes to help finance retirement.

According to the 2009 survey and accompanying report by Schaumberg, Ill.-based Society of Actuaries, those who do generally plan to tap into their home equity by selling their home (45% of retirees, 56% of pre-retirees). They are less likely to access this equity through a home equity loan (20% of retirees, 9% of pre-retirees), a reverse mortgage (12% of retirees, 9% of pre-retirees), or a new mortgage (5% of retirees, 0% of pre-retirees).

“Except for outright sale of their homes and downsizing, options for the use of such equity to help finance retirement is not part of the plan for most retirees. Reverse mortgages and other similar means of accessing home equity do not yet appear to have achieved much acceptance,” the report states.


Among other concerns highlighted by the study, just 72% of pre-retirees and 55% of people who are retired are accounting for inflation in their retirement planning, when compared with other planning activities, according to a recent report.

Ultimately, the survey indicates a need for people to better manage risk as it relates to retirement planning. Other findings show that many individuals, or more than 80%, do not look more than 20 years ahead when making important financial decisions and only 5% look to or beyond their life expectancy.

“By not having a set plan for how they spend savings, these individuals are exposing themselves to more risks down the road, such as outliving their assets or not having funds to manage unexpected long-term care costs,” said actuary Steve Vernon, FSA, MAAA. “Individuals always need to take inflation into consideration and now is the time to take action to address these inflation and longevity concerns by planning for multiple scenarios.”

On the flip side, the study found the majority of retirees are managing savings and spending including 68% of retirees who create a plan to manage their money each year to prevent them from outliving their finances. Additionally, 73% of retirees consider allocating their investments and savings to different types of assets. Only 24% of retirees, however, have purchased or plan to buy a product with guaranteed income for life.

See the full study findings.

Written by Elizabeth Ecker



Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • It is now less than satisfying to hear the mantra that more than 10,000 baby boomers are becoming 62 each and everyday. Such pontificators seem to tail off with some Pollyannaism that with little more than continued marketing we will see better and better numbers now and in the future.

    Well in the last 3 years and based on these statistics, we have well over 10 million new seniors in our market space. In that same period, far fewer than 10 million seniors have passed away. Yet the results are less than spectacular.

    So what are the results? An article like the one referenced above. Even the government agency which insures our products sees at least 19 more months of nothing more than the same which is slightly worse than the volume for the last fiscal. What is even more remarkable about this prediction is it was made after the introduction of Savers which currently seem to be gaining initial traction.

    Where do we go from here? Forget about everything from shaky lenders to the Fed rule coming at us in less than 30 days. All of that is a side show. The message behind the article is that seniors are 1) not receiving our message, 2) not understanding it, 3) ignoring it, and 4) are plain rejecting it. The question is will we heed that message or just go about looking for industry leaders to tickle our ears.

string(113) "https://reversemortgagedaily.com/2011/03/02/20-of-pre-retirees-plan-to-use-home-equity-for-retirement-study-says/"

Share your opinion

[wpli_login_link redirect="https://reversemortgagedaily.com/2011/03/02/20-of-pre-retirees-plan-to-use-home-equity-for-retirement-study-says/"]