When seeking additional retirement income, some retirees may seek to downsize, move to an area with a lower cost of living, or use assets from a retirement account. Yet many may not want to sell their home or other investments.
One solution is a reverse mortgage, which offers homeowners over 62 years old (over 60 in some states) flexible ways to use their home equity to help meet retirement goals.
In the past, reverse mortgages were typically a last resort. Today’s reality is drastically different: Homeowners and financial advisers can view a reverse mortgage as part of a holistic retirement plan.
While individual needs and situations differ, one of the key drivers behind a reverse mortgage is to provide an annuity-type payment or to eliminate an existing mortgage payment — both of which increase household cash flow. This additional cash flow can be used to pay for expenses, in-home care or other long-term needs, and to help keep retirement income at a level where assets are not depleted.