Tapping Home Equity in Retirement

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Using data from the American Housing Survey and the Survey of Consumer Finances, the MMI, in conjunction with the National Council on Aging (NCOA), developed a baseline demographic profile of older homeowners who tap home equity to meet financial shortfalls. The study also includes a review of existing literature with recommendations on the use of home equity to manage cash flow in retirement.

Key Findings
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Key Findings

The study highlights different options for using home equity that are not part of the current national conversation:

The use of reverse mortgages to delay the age at which one might begin to collect Social Security, thus increasing the amount of one’s ultimate monthly Social Security income.
Reverse mortgages as a stopgap measure to consolidate credit card debt, to cover investment losses or to defer mortgage payments.
Periodic distributions that would tap home equity to help people meet expenses if they outlive their savings/retirement income.

Programs that combine public benefits with modest amounts drawn from home equity to help seniors stay at home.
Home equity lines of credit for emergency spending, such as home maintenance, without which many homes decay and lose value.
Reverse mortgages with a line of credit option for borrowers to pay out-of-pocket health and home care expenses.

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Methodology

This study is based on an analysis of the 2007 American Housing Survey and the 2007 Survey of Consumer Finances, as well as a review of existing literature and other consumer surveys.

The statistics reported were developed before significant changes in the housing market and the economy, which may have had significant effect on consumers attitudes and actions.

Tapping Home Equity in Retirement

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Key Findings

Graphics

Methodology

Related Content

Key Findings

Graphics

Methodology

Related Content