Think Tank Sees Promise in Reverse Mortgages for Retirement Planning

For many American workers today, the road to a comfortable retirement is paved with many challenges, both within and outside of retirees’ control. Not the least of these issues is the fact that a shortfall in savings will force retirees to consider non-traditional retirement funding solutions, particularly home equity and reverse mortgages, said one official from a Washington, D.C.-based think tank this week.

“Home equity, we think, is underutilized in retirement planning,” said G. William Hoagland, senior vice president of the Bipartisan Policy Center, a Washington, D.C.-based non-profit organization that aims to promote health, security and opportunity for all Americans.

Hoagland, who helps direct and manage fiscal, health and economic policy analyses for the BPC, presented on the retirement security and personal savings challenges facing today’s Americans at a policy forum hosted by the Employee Benefit Research Institute and the Education and Research Fund on Thursday.


Citing that Americans own an aggregate $12 trillion in home equity, and that for many retirees home equity represents a significant portion of their assets, Hoagland suggested reverse mortgages will become an even more popular retirement solution.

“Fifty percent of all homeowners age 62 are home-rich and cash-poor in the sense that more than half of their net worth is held in home equity,” he said. “The reverse mortgage market is small and the product carries some risk, but nonetheless we [BPC] think it could be a valuable tool for retirees with significant home equity.”

Two years ago, the BPC launched the Commission on Retirement Security and Personal Savings with the aim of addressing some of the most important financial issues faced by all Americans. Since then, the Commission has extensively analyzed certain challenges and has developed a bipartisan package of solutions, the final report of which the BPC plans to release June 9.

Such challenges addressed in the forthcoming report include ways to expand access to “well-designed” workplace retirement plans, facilitate personal savings for short-term needs as well as retirement, and strategies to preserve and strengthen Social Security for current and future generations of American workers.

Reverse mortgage policy recommendations will also be included in the final report, Hoagland said, though he did not expound on the finer details of what these proposals might entail.

Written by Jason Oliva

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  • If the general comments of Mr. Hoagland are reasonably representative of the conclusions of the study, the recommendation of this EBRI study could be a significant if not substantial boost to the acceptance of HECMs as Main Street as well as Mainstream solutions to cash flow needs throughout retirement.

    There now exists a need for HUD to see how financial assessment as well as other changes made since September 29, 2013, can be ratcheted down to be more inclusive of cash poor senior homeowners without significantly increasing the risk on 1) the MMI Fund and 2) the potential number of those defaulting on property charge payments will significantly rise as a result.

  • Great article Jason! William Hoagland of the Bipartisan Policy Center out of Washington, DC could not have given us in the industry a better plug!

    Although he is right on target with what he is saying! , It is a fact that fifty percent of all homeowners age 62 are home-rich and cash-poor and that more than half of their net worth is held in home equity!

    Hoagland is also right by saying the reverse mortgage could be a valuable tool for retirees with significant home equity.

    This is something I have along with many of my colleagues have been saying all along! We need to push and educate the financial planning community on the concept that the HECM can fit into their retirement planning services for their senior clients. The timing could not be better, especially with the positive publicity going in our favor!

    However, before we go after financial planners aggressively, we must understand their mindset when it comes to their handling of their clients. We need to understand their language and terminology, which differs from ours. As I had said before, the financial planner/advisor can learn from us and wants to learn from us as well!

    John A. Smaldone

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