Nearly one-third (30%) of American seniors report 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. This is according to the results of a new post-2020 retirement survey conducted by leading reverse mortgage lender American Advisors Group (AAG).
The survey, conducted at the end of January with a sample size of over 1,500 participants, also describes how the events of last year reinforced the desires of seniors to remain in their homes, where they felt safer than in years past, according to the results. Over half of respondents said that they intend to remain in their homes forever rather than relocate, according to the results.
The survey helps to further emphasize the additional need for solutions that allow seniors to remain in their homes for longer periods of time, while also providing financial flexibility that some seniors may find difficult to achieve otherwise based on individual financial circumstances.
Pandemic effects on senior work patterns
In addition to 30% of respondents describing that their retirement situation has deteriorated during the pandemic and that 20% of respondents were forced to withdrawal additional money from at least one of their retirement accounts, nearly half of the 1,500 respondents also described that they don’t actually fully intend to stop working once they’ve retired from their primary careers.
46% of respondents described that in order to make ends meet or to maintain their lifestyle, they will plan on either continuing to work part-time or pick up some kind of a side job in their retirement years, according to the results. The expectation of a traditional retirement age is also showing signs of change, according to these results.
18% of respondents said that they now plan to work past the age of 70. An additional 12% didn’t even bother to attach an age to their future work expectations, instead saying that they plan to work full-time for the rest of their lives.
2020’s impact on seniors’ attitudes
In other areas, though, the pandemic has had other effects including the reverence and closeness that seniors feel for their homes. More than half of seniors (55%) plan to remain in their homes for the rest of their lives with no stated desire to leave for another living space. In addition to the desire to remain home, nearly half of respondents (47%) also may be able to make use of home equity more efficiently since they report that their traditional, forward mortgage has been completely paid off.
While it may not come as a particular surprise considering the climate created by the pandemic, nearly a third of respondents (28%) report that they feel safer in their homes when compared with years past, potentially indicating a new uneasiness that comes with being in public places while COVID-19 is still an active concern in most parts of the country and the world.
The survey also aimed to gauge the attitudes of seniors in relation to the employment of their homes’ equity to solve retirement financing challenges. Using a ranked choice response system, the survey gave seven different options that a senior might employ to make ends meet in retirement: asking for a mortgage forbearance; accessing home equity; selling investments; refinancing an existing mortgage; creating an emergency fund; filing income taxes; or simply not using any strategy at all.
Using home equity came in as the fifth-likeliest strategy a senior would use. The top four choices among respondents were asking for a mortgage forbearance; creating an emergency fund; refinancing an existing mortgage; and selling investments. These results seemingly indicate that a perennial issue afflicting the reverse mortgage product category – and home equity tapping in retirement more generally – remains education and awareness of the particular options available.
“[M]ost seniors still don’t realize that their home could be the solution for their financial needs and give them the peace of mind they are searching for,” the company says in its survey results. “While the survey shows that many seniors are planning to work longer and look for alternative ways to increase cash flow, many could easily achieve a sustainable lifestyle by utilizing the home equity they have built over the years.”
What the survey can tell the reverse mortgage industry
The pandemic has created a new level of urgency for reverse mortgage lenders to understand how the impact of all the social and economic change has affected the industry’s primary demographic, and the survey helps to get AAG closer to that understanding. This is according to Martin Lenoir, chief marketing officer at AAG.
“This study showed us that not only are seniors still recovering from last year, but that they have a different outlook on the importance of their home,” he says. “This may be the perfect time for them to bridge the gap and utilize their home equity to regain the peace of mind they had in years past.”
Some of the results of the survey bear out predictions made by AAG Founder and CEO Reza Jahangiri in a December episode of The RMD Podcast, where he discussed ways in which the COVID-19 pandemic could have an effect on the desires of seniors to remain in their homes.
“I think COVID is acting as an accelerant to an already existing trend of people wanting to age in place,” Jahangiri said in the podcast. “People want to live in their homes, they want to utilize things like in-home care. As we know right now, seniors don’t want to be susceptible to the pathogen and be out in a senior living and nursing home-type environment, even more than before.”
Read the results of AAG’s 2020 post-retirement survey.