Each day, thousands of American are retiring. For many, finding sufficient income when in retirement will be a challenge. In fact, according to a brief from the Boston College Center for Retirement Research (CRR), middle-class Americans age 65 to 69 have more or equal wealth in their home equity than in their financial assets. Yet few retirees are taking steps to utilize this significant asset to help them finance their retirement. As a result, one possible means of generating income in your retirement years is with a Home Equity Conversion Mortgage, also known as a reverse mortgage. However, according to a recent CBS News article, only about 2% of eligible homeowners have taken out a reverse mortgage.
AAII Weekly Survey Question
After reading these statistics, I was curious to see how our readers felt about reverse mortgages so I posed the following question:
Would you consider, or are you using, a Home Equity Conversion Mortgage (commonly known as a reverse mortgage)?
Here are the results:
In all, 1,959 votes were cast through Monday, April 17.
The responses from our readers echo the statistics from other sources, mainly that few people are making use of reverse mortgages. Among our readers, only 0.61% (12 out of 1,959) have already taken out a reverse mortgage.
Roughly one-third (32.4%) would consider a reverse mortgage of their retirement income needed supplementing or think they will probably use a reverse mortgage to tap into their home equity.
Nearly 60% (59.3% to be exact) of the respondents said they would never consider a reverse mortgage while 8% say they do not know enough about them to say whether or not they would take out a reverse mortgage.
Weekly Special Question
With so many people entering retirement, many are finding the transition from working to retirement a difficult one.
To see what our retired readers felt were the hardest aspects of transitioning to retirement, last week’s special question asked:
If you are retired, what was the hardest aspect for you in transitioning from working to retired life?
In all, 264 retired readers offered their thoughts on what was the hardest thing for them making the transition from working to retirement.
Fortunately for our readers, the number-one response was that there weren’t any significant issues transitioning to retirement.
The biggest challenge facing our readers as they transitioned to retirement was adapting their investing, saving and spending patterns to adjust for the loss of a paycheck and a possible shift to Social Security or a pension.
Coming in a close second as the hardest aspect of transitioning to retirement is the loss of interpersonal contact with colleagues and customers.
Tied for third as the hardest aspect of transitioning from work to retirement for our readers were staying active, either physically or mentally, and finding the time to do everything they want to do in retirement.
Other themes running through the responses include:
- Having a purpose
- Adjusting to spending more time with their spouse
Here is a sample of the responses:
- “Adjusting my investment portfolio to generate more income (dividends and distributions).”
- “Adjusting to the new daily regimen.”
- “Becoming out of touch with the people I used to work with.”
- “Convincing my adult children that retirement does not equal instant availability for their needs.”
- “Finding a new social network.”
- “Finding enough time to do everything I wanted to do.”
- “I’ve been so busy in retirement I don’t know how I ever had time to go to work.”
- “Keeping motivated, focused, to accomplish things I had planned to do.”
- “My wife getting used to my greatly increased presence around the house…”
- “NONE. This is the best time of my life, and the “Transition” was a non-issue.”
- “The cut in the amount of money I have to live on and realizing that I should have planned a lot better for retirement but never got the education I needed.”
Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at http://www.aaii.com/memberquestion.