In a study by HomeAdvisor and National Aging in Place Council, there will be about 73 million Americans age 65 or older by the year 2030. Of those, 90 percent or more will want to remain in their home.
For this population, HomeCare Magazine explains there are several things seniors and family members should do to make sure the home is a safe environment for the senior. Houses commonly need to undergo some remodeling to cater to the needs of the homeowner. These changes can be as small as fixing broken steps or adding no-slip strips in the shower. Other repairs can be larger, such as installing a ramp for a wheelchair or a lift for the stairs.
“90 percent of Americans will want to remain in their home after retirement.”
Planning for retirement means seniors will have to determine how they will continue to pay for regular living expenses, as well as any future costs that come with living independently in the comforts of their home. However, according to a report from the Employee Benefit Research Institute, many retirees fall short in their planning. Married couples are typically short $19,304 per person, while single women are generally $62,734 behind and single men are $33,778 short.
When creating a retirement plan, the majority of people look to Social Security to help them out. Forbes explained that Social Security will account for about half of the income for two-thirds of retired Americans. The average married couple’s retirement income will come primarily from Social Security, 13 percent from non-equity assets and 27 percent from home equity.
There are many ways to utilize home equity as a means to supplement a retiree’s income. Reverse mortgage loans have proven to be a versatile financing planning tool for many seniors.
How reverse mortgage loans can help
Reverse mortgage loans enable senior homeowners age 62 or older to access a portion of their home equity and convert it into cash. It is called a reverse mortgage loan because rather than the borrower pay the lender monthly, the lender pays the borrower. The loan is not due back to the lender until the home is permanently vacated by the borrower.
The money from a reverse mortgage can be used for a variety of purposes. Borrowers are able to choose how they receive the money. This can be a monthly payment, one lump sum, a line of credit or a combination. Those remodeling projects seniors might want to complete to make their home more accessible can be funded by a reverse mortgage loan.
The money from a reverse mortgage loan can be used in other ways, too. Some common uses of a reverse mortgage are to supplement cash flow and fund healthcare costs. According to the Social Security Administration, the earliest one can begin receiving Social Security is age 62. Some seniors have delayed receiving these benefits in order to collect larger monthly amounts later on. A reverse mortgage loan can help bridge the gap between age 62 and when a senior begins collecting Social Security.
In order to qualify for a reverse mortgage, the home should be the senior’s primary residence. If there is an outstanding balance on the mortgage, a reverse mortgage can be used to pay off that existing mortgage. This product makes aging in place more feasible for seniors because homeowners will have one less monthly payment to worry about in retirement.