A MarketWatch column this week jumped on the reverse mortgage press train with input from Texas Tech’s Dr. John Salter and reference to new investment advice from Fidelity that looks to home equity as a retirement mechanism.
Following a small surge of positive press and recognition of reverse mortgages from financial planners, the article refers to a growing presence of investment advice that leans toward home equity conversion tools for retirement.
To bridge that income gap, Fidelity is telling folks to do the usual things: adjust their asset allocation, increasing the percent allocated to stocks; increase their savings; delay their retirement date; and annuitize their retirement assets. But Fidelity is also telling folks, as researchers at the Center for Retirement Research just did last week, to tap into their home equity.
According to Fidelity, 72% of people it surveyed own a home and 32% of homeowners have no mortgage. “Through downsizing and expense reduction, this home equity could be harnessed to generate income in retirement,” Fidelity said in its release.
John Salter, an associate professor in the Personal Financial Planning department at Texas Tech University, is among those who agree with Fidelity’s assessment that people will need to find ways to use home equity for retirement income. “Many current and future retirees’ homes will be one of their biggest assets, and this may be a resource moving forward that shouldn’t be ignored,” he said.
To be sure, Fidelity did not explicitly say “use a reverse mortgage.” But increasingly, advisers and others such as Salter are telling Americans to at least consider the product when building a retirement income plan. “I believe reverse mortgages will be a very important tool to consider now and moving forward with retirees,” Salter said.
Read the original article.
Written by Elizabeth Ecker