Older Homeowners Facing 3 Risks

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Even retirees who saved for retirement are at risk

Older American homeowners may want to take a second look at all their retirement options sooner than later.  Retirees who have saved for their retirement may find themselves challenged more specifically in three ways: home appreciation, stock portfolio losses, and increasing interest rates. [download transcript]

Seasoned reverse mortgage originators can certainly recall how the borrowers who took the loan prior to 2009 locked in a portion of their home’s value despite the market crash. While it’s highly unlikely that we’re in another housing or credit bubble, home appreciation is slowing nationwide in 71 of the largest 100 markets. According to the latest data from Black Knight, home values have shown their biggest single-month decline, albeit a modest one, since the housing market began to recover. In the west, California saw home price appreciation growth drop from 10.3% to 3.7% in nine months. While far from a death knell for the housing market this does serve as a reminder that a homeowner’s access to equity is no certainty, and what equity they have could dwindle significantly. A point worth making with prospective borrowers.

While the nation watches the stock market on their daily news shows, retirees are especially wary with good reason. Despite the Dow Jones Industrial Average’s significant gains in the last 3 years, the overall equities market remains volatile. That volatility is particularly real for retirees who may find themselves unable to draw the same amount from their investments each month without significantly shortening the life of those funds. As a recent New York Times article put it “If you have to start selling investments when they are worth less, you’ll have to sell more shares to get the cash you need — and the