What’s your biggest worry about retirement?

Chances are good that the fear of outliving your savings looms large.

Indeed, 45% of Baby Boomers responding to the 2020 Transamerica Retirement Survey of Workers say this is their greatest source of anxiety.

With COVID-19, your money worries may be especially acute. More than 80 percent of Americans feel financial stress, according to a September 2020 survey conducted by The Harris Poll for the National Endowment for Financial Education. Moreover, 55 percent cite concerns about insufficient savings, whether for retirement, college or emergencies.

Should you, too, see yourself in a financial pinch as you approach or hit retirement, what are some new ways to realize your lifelong dreams? Are there any “hidden” resources to help you enjoy every year, no matter how long you live?

Looking at Your Mortgage—In Reverse

One potential resource for some Boomers is a reverse mortgage loan.

This kind of a mortgage enables homeowners who are 62 or older to convert some of their home equity into potentially tax-free cash*. As long as homeowners stay in their houses or condos, and meet their minimum obligations, such as paying property taxes and insurance, and maintaining the home, they don’t need to pay the loan back while having full access to the money. Reverses are helping some Boomers to:

• Age in place: Unanticipated layoffs, a spouse’s death, or divorce may make it difficult to afford their mortgage without this cushion
• Add little luxuries like “retail therapy” and cold brew coffee back into their lives
• Free up other funds for investment
• Make major gifts to their adult children, or to charity, while they are still alive

HECM (Home Equity Conversion Mortgage) reverses, which are insured by the US government, provide Boomers 45-75 percent of their home’s value--their age and current interest rates factor into the final amounts.

The loan repayment terms are one of their biggest benefits. For example, if Boomers remain in their homes until they die, their children or grandchildren will not be personally liable for any shortfall. The money will be deducted from the sale of the home, and never from heirs’ assets. Moreover, these mortgages can be in both spouses’ names (as long as they are at least 62) so if one dies, the other can still use the cash while he/she remains in the house and meets all loan terms.

Reverses are not for all Boomers; for example, borrowers must be able to afford their taxes, insurance and maintenance with the extra cash in hand. But for those who want to ensure a fulfilling and comfortable retirement in the house and neighborhood they love, a reverse mortgage can represent “found money” Boomers didn’t know they had.

Bonny Gilbert, Esq., NMLS #300106 leads the Bonny Gilbert Reverse Team with Fairway Independent Mortgage Corporation, Boston. She is licensed in Massachusetts, New York, New Jersey, and Virginia. Contact her at bonnyg@fairwaymc.com or 857-300-6775. 380 West Broadway Unit 101, South Boston, MA 02127.  Click here for legal disclosures.

* This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.