Sep
9
My Home, My Security Blanket
Filed Under equity, personal finance, real estate
When I discuss retirement with mortgage clients the discussions either go like this….
“well social security won’t be there for me and I’m still recovering from the dot com bust and my financial planner is a complete moron and at the rate I’m saving, I’ll never retire”
or like this…
“I plan on retiring at 55-60 depending on what happens with my investments and my home’s value”
Your home’s equity is a solid foundation for retirement according to an article entitled Retiring on Your Home’s Equity
A recent study commissioned by Oakland, Calif.-based Bell Investment Advisors, found that seven out of 10 60-year-olds consider their home part of their retirement plan. Of that group, almost one in five — 24% to be exact — said their home’s equity represents half or more of their total savings.
Also included are the sources where current retirees will be drawing their retirement:
Wealth holdings of a typical household prior to retirement*:
Social security: 42%
Primary house: 21% of total wealth
Defined benefit plan: 16%
Defined-contribution plan: 8%
Financial assets: 7%
Business assets: 2%
Other nonfinancial assets: 4%* Households headed by individuals aged 55-64. Source: Survey of Consumer Finances 2004.
More importantly, the article continues to discuss two ways to tap your equity when you retire including downsizing into a smaller home and keeping the profits and a reverse mortgage where you get a mortgage that pays you.
This article brings to light the importance of mortgage planning as a key component in your wealth management. Your home is your security blanket since it can be the largest asset in your estate. Your mortgage allows you to manage this asset. Obviously I just scratched the surface of mortgage planning but if you need more information, contact me.
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