Industry-leading reverse mortgage lender American Advisors Group (AAG) recently released the results of its new post-2020 retirement survey, in which nearly one-third (30%) of American seniors said that the events of 2020 – with the COVID-19 coronavirus pandemic at the center of the year’s events – had a negative impact on the plans and ability for them to retire, while over one-in-five seniors (21%) said they were forced to find additional sources of income in order to make ends meet.
On the industry side, some of this data correlates to the issues which remain front-of-mind on the part of reverse mortgage industry participants, according to results gathered from RMD’s own 2021 Industry Outlook survey.
Portions of AAG’s survey results surprised representatives of the company, particularly the results about the numbers of seniors who are amending or postponing their retirement plans as a result of the economic turmoil that has spun out of the pandemic. The results also help to indicate to AAG – and potentially the wider reverse mortgage industry – that there is still much work to be done on the fronts of reverse mortgage product education and advocacy, according to a company spokesperson.
What AAG found surprising about its survey
When asked to describe what the company found most describing about the survey results it recently released, the immediate data point related to the economic impacts of the ongoing pandemic immediately became a focus of what the company has taken away from the data gleaned from the data-gathering effort.
“The statistics regarding the number of seniors who plan to push back their retirement or work during their retirement years were surprising,” an AAG explains to RMD. “One reason for this trend could be the desire to re-fund their savings after the pandemic, which respondents ranked as one the most popular financial solutions.”
The survey also showed that the reputation of the employment of home equity came in relatively low among seniors who expressed their thinking in terms of exploring options available to them to enhance their retirement funding. Using a ranked choice response system, the survey gave seven different options that a senior might employ to make ends meet after concluding their careers.
Using home equity came in as the fifth-likeliest strategy a senior would use. It came in behind asking for a mortgage forbearance; creating an emergency fund; refinancing an existing mortgage; and selling investments. The ranking position of the home equity option demonstrates that clarity in the messaging behind the employment of home equity leaves something to be desired when compared to seniors’ first, second, third and fourth choices.
“Many are searching for answers, but few are looking towards utilizing their home equity, which could help them achieve their financial goals without needing to prolong their working days,” the spokesperson told RMD.
What the wider reverse mortgage industry should keep in mind
That fifth place position for using home equity helps to emphasize for AAG leadership a long-held reverse mortgage industry belief, namely that education enhancement must remain a priority in the years ahead in an effort to increase the potential prominence that home equity can have among seniors who are looking for a viable solution to issues threatening their ability to adequately fund retirement.
“We need to continue educating the public on the financial benefits of utilizing home equity,” an AAG spokesperson said. “We know that seniors have many people around them that they look to for advice, support and information. Whether that circle includes adult children, financial professionals or other advisors, these are the audiences we know could benefit from increased education about home equity products.”
This aligns with other industry participants’ perceptions of ongoing difficulties based on RMD’s own survey efforts. According to RMD’s 2021 Industry Outlook survey asking specifically about components that constitute the greatest challenges to the reverse mortgage industry in 2021, a combined 60% of the respondent pool named “negative product perception among consumers” (33%) and “lack of product awareness among consumers” (27%), respectively, as the top two challenges that the industry will face in 2021.
Many retirees still not prepared for life after work
When it comes to the things that AAG keeps in mind about these survey results, as well as its own interpretation concerning what the wider reverse mortgage and home equity tapping industries should keep in mind about what they could mean for seniors, it all comes back to retirement readiness. Having the understanding upfront for the difficulties many seniors are, and will continue to face in retirement is very important for the future of the home equity tapping space for seniors, the spokesperson said.
“Retirement is changing and many seniors aren’t prepared for it,” an AAG spokesperson told RMD. “That unpreparedness was compounded by the pandemic and left many searching for financial alternatives to fund their life, but didn’t know where to turn. The more we can create greater awareness and familiarity of the advantages and the safeguards, the more seniors we will be able to help.”
It is similarly undeniable, though, that the ongoing impact of the pandemic has continued to fuel additional interest in the reverse mortgage product category. Other parts of the RMD Outlook survey indicate that over 60% of industry respondents describe their outlook on the business as having improved over the course of 2020, with about one third indicating their outlook has stayed the same.