Few Older Americans Relying on Home Equity for Retirement

A home is one of the most valuable assets a person can own, the value of which can be unlocked and converted into extra cash flow via a reverse mortgage. But even though home equity can be a vital resource, few older workers are serious about tapping their home value as a source of income in retirement, a recent study suggests.

Only about 1% of Baby Boomers (adults born between 1946-1964) expect to lean on home equity as their primary source of income to cover their living expenses when they retire, according to a survey released Thursday by the Transamerica Center for Retirement Studies (TCRS), a division of Transamerica Institute, a nonprofit, private foundation.

The 16th Annual Transamerica Retirement Survey is a compendium of data over the last five years (2011-2015) that explores retirement preparedness of American workers, offering perspectives on retirement confidence, savings rates and planning-related activities.


In collecting data, Transamerica conducted a 25-minute online survey between February 18 to March 17, 2015 among a national sample of 4,550 workers age 18 an older, using an online panel from Harris Poll. Survey respondents were categorized into three generational groups: Millennials (born 1979-1996), Generation X (1965-1978) and Baby Boomers.

While Millennials (48%) and Generation X (40%) most frequently cite 401(k), 403(b) accounts or IRAs to be their expected primary sources of retirement income, Baby Boomers (35%) most frequently cited Social Security. For Boomers, 401(k), 403 (b) and IRAs were a close second, garnering 26% of responses.

“With regard to saving and planning for retirement, there’s no such thing as an ‘average’ American,” said Catherine Collinson, president of TCRS, in a written statement. “Each demographic segment faces its own unique opportunities and challenges. Nevertheless, we live in a time in which all workers face retirement-related risks and the need to take greater personal control of their long-term financial security.”

Retirement confidence is highest among Millennials and Baby Boomers with 63% and 61%, respectively, saying they are “somewhat” or “very confident that they will be able to retire comfortably. Relatively few workers of all three generations are “very” confident, including 17% of Millennials, 11% of GenX and 15% of Boomers.

“American workers are still recovering from what is commonly referred to as the Great Recession,” Collinson said. “Most are focused on saving for retirement yet confidence is still lacking among many. As a natural outcome, many expect to continue working in retirement.”

Written by Jason Oliva

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  • Anyone with a smidgen of financial acumen understands that home equity does not produce spendable income unless some portion of the home is actually producing income (such as being rented). The survey is not designed to elicit an answer that will yield any real indication of the percentage of those surveyed who are considering a reverse mortgage.

    What is interesting is that 11%-12% of those surveyed have as their highest financial priority paying off their mortgage. This is the group which should be our priority.

    Convincing seniors that home equity has or does not have latent income potential is a waste of time. The truth is there are limited income earning opportunities for retirees once retirement begins in earnest; while making that statement to retirees can be non-productive, there is a need to show those looking at retireement that the need in retirement is cash flow and in that regard HECMs are a contingent source of cash flow that needs to be explored by those over 50 and exploited by those over 62.

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