Reverse Mortgage Information found a great report from Fidelity Research Institute titled Structuring Income for Retirement: Addressing Americas Emerging Guaranteed Income Gap. The report discusses some of the traditional income sources (social security, defined benefit pensions, etc.) but also points out that these sources will be relied on less and less by future generations of retirees. While the study notes that it will be crucial for retirees to find alternate ways to insure their lifelong income through restructuring investments and annuities, there is nothing noted about reverse mortgages.
Reverse Mortgage Information puts it nicely saying, “In the realm of reverse mortgages, the HECM tenure payment option is the closest thing there is to a guaranteed income source.” I find it strange that a huge company like Fidelity isn’t including reverse mortgages in a report like this but they also cover other income challenges including:
- Inflation Risk – The risk that retirement income loses buying power over time.
- Sequence of Returns Risk – How the sequence of good/bad investment returns over a retirement period will impact the depletion savings.
- Mortality Risk – the risk that retirees underestimate their life expectancy and outlive savings
- Annuity Puzzle – Reasons why retirees don’t choose annuities and other income choices.
To read the report click the link below.