Reverse Mortgages Could Boost Boomers’ Income Without Eating Up Equity.
More than 50% of Boomers have Zero Nest Egg
That’s not to say that they don’t have any assets or income:
- 77% own their homes
- 36% have paid off their mortgages
- 49% have some sort of defined benefit (i.e.. pension plan)
- Almost all receive some sort of Social Security payment
- What about the other 48% who do have savings?
- It’s a mixed bag.
- The median household among this group has $148,000 saved — enough to provide about $6,000 a year in income to those following the 4% rule.
Social security provides a huge portion of retirement income.
Overall, it provides a whopping 44% of all income for those aged 65 to 74.
Even among those who have built up their nest eggs, that savings provides just 9% of their retirement income.
Now I want to show you how a reverse mortgage can Increase your income by $1000 per month without reducing your equity:
Lets say you own a home that’s valued at between $300,000 and $350,000 and it’s paid for you could conceivably liberate $170,000 of that equity from a reverse mortgage.
Now lets say you use that equity to by an income property like this one:
This is a property that I own.
As you can see, the total investment was $170,000 resulting in an income stream of just a little over $1000 per month or a 7.1% return on my investment.
I point this out just to show you that I’m not making this stuff up as a hypothetical like most of the other sites that you might look at.
Instead, I’ll show you the real deal….
So let’s tie this all together:
At the beginning of this article I suggest that your home can increase your monthly income by
Since the average retirement income is about $35,000 per year if you could increase your income to $47,000 that would be a 34% increase in the cash in your pocket. But wait a minute.
How does this not reduce your equity?
Doesn’t the reverse mortgage reduce the equity in your home because the mortgage is growing?
Consider that you just added an additional property that will also grow in equity. This will offset the reduction.
The bottom line is that this scenario can put an additional $1000 per month in your pocket.
What kind of difference would that make in your retirement life?