Quarter of Seniors Open to Reverse Mortgages, Other Equity Release Strategies

Only about 25% of seniors feel comfortable using home equity as a source of supplemental income in retirement, according to a recent study — but one reverse mortgage advocate says that figure still represents a major opportunity for financial planners.

Pointing to a paper he published in the Journal of Financial Planning, professor Jamie Hopkins took to Investopedia to lay out key ways that seniors could use their home equity in retirement — including the Home Equity Conversion Mortgage option.

“Even if only 25% of retirees are willing to strategically use home equity in retirement, advisors cannot continue to ignore home equity as part of the equation,” Hopkins wrote. 


The American College of Financial Services professor emphasizes improvements made to the reverse mortgage program in recent years, proclaiming it to be “far less expensive and more economically secure than anything that existed before.”

Hopkins also notes that homeowners could also sell their properties to fund long-term care in nursing homes or assisted living facilities, leave the properties to their children, take out a home equity line of credit or HECM credit line to diversify their retirement portfolios, rent out a bedroom, or simply downsize to a smaller property.

But those strategies have certain downsides, with Hopkins writing that some older homeowners wouldn’t want to have a “Golden Girls”-type retirement scenario, and that heirs often are forced to sell inherited properties below market value to simply rid themselves of an asset they no longer want.

Still, Hopkins provides a quick breakdown of a senior’s home-equity options in retirement, and emphasizes how important the asset could be to creating a stable financial footing for older homeowners.

“Home equity is the largest untapped resource for retirees. When used correctly, it can support a more secure and happier retirement,” Hopkins concludes. “When considering using home equity, you will find that there is no one-size-fits all strategy. Instead, home equity can function differently for homeowners with different goals and concerns.”

Read the full breakdown at Investopedia.

Written by Alex Spanko

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  • The report is interesting. However, if we expose ourselves to the financial advisory community properly, our educational process will flow over to our senior homeowners.

    This is the same story we have heard for years, the misconception about reverse mortgages on the part of our seniors. We are letting the industry down by not doing enough educational workshops and by not getting out to the senior organizations like we need to.

    Yes, the financial planner and the professional fiduciary sector can play an important role in developing a better understanding of our product with our seniors!

    Home equity is the largest untapped resource for retirees, it is a tool under utilized, we need to change the perception of our product out there for the benefit of our seniors!

    John A. Smaldone

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