Paul Dwyer No Comments

The consumer’s perspective

We tested consumer perspectives with a group of over a thousand people aged 50 and over. These consumers seem somewhat optimistic about the lifestyles that await them in retirement despite our research findings on the scale of under-funded pensions, including 70% of them expecting to travel in retirement, 30% of them seeking to help their children financially and 22% of them planning to pay off their mortgage.

Overall their expectations of required retirement income was realistic, being typically two thirds of salary. However, three quarters had either not done any planning for retirement or not refreshed their plans for a number of years. Despite this, half were confident that they would have sufficient income in retirement, with 70% expecting their non-pension saving to provide at least a fifth of their income, with half expecting to use the value in their home to boost their retirement income.

For those who did expect an income shortfall in retirement, this was an average of £11,400 per annum. Aside from continuing to work, down-sizing was seen as the most likely option and the average respondent thought that just over £100k could be raised from their home. There was an expectation amongst some that they would receive much more income than current annuities or drawdown can facilitate. This re-enforces our observation that for many people, down-sizing alone will not meet the income shortfall and additional saving is required.

Of note was the group’s hostility towards using equity release. Only 14 people (out of the thousand) were planning to use equity release as a means of boosting retirement income. For those that subsequently realised that they may have an income shortfall to address, only 6% would use equity release. Whilst 80% were aware of equity release and two thirds claimed to understand it, collectively they only managed to answer on average 3 out of 13 true or false questions correctly on equity release, indicating a significant lack of understanding. Whilst we are not advocating equity release as a solution, it may be appropriate for people that need to access capital from their home and for whom down-sizing is not the best option. It is therefore important for these people that their lack of understanding of how equity release works be addressed.


Paul Dwyer


TISA (2016) Can housing wealth save the day? 752 Durham, North East England Preston Farm Business Park

Marguerite Taylor No Comments


Read this article and then send it to your Financial Planner.

Most people who rely on investments for their retirement income suffer from varying levels of investment returns, resulting in fluctuating levels of income.

For example, a couple with $30,000 in the bank and $600,000 invested in Australian Shares may have earnt $118,200 in 2013 and seen that figure plunge to $22,800 in 2015! (All Ordinaries Index yearly return  – 2013 Av. 19.7% – 2015 Av 3.8%– source *Market Index Australian Sharemarket Historical Returns Report).

That same couple will also experience a significant reduction in the part pension eligibility as a result of the changes to the Pension Asset Thresholds, effective 01/01/2017.

An easy way for investors to maintain a constant level of income during their retirement is to establish a Stand-By Reverse Mortgage loan. In the above example the average annual return on Australian shares in 2013 was 19.7% whilst in 2015, it was only 3.8%

By using a Stand-By Reverse Mortgage loan, you and your Financial Planner can identify a minimum level of return you need to maintain your lifestyle. For example, if the above couple established 7% p.a. as a minimum level of return, this equates to an income of $42,000 p.a.

In the 2015 year, they would have earned $22,800.00a shortfall of $19,200!  Using a Stand-By Reverse Mortgage loan, they would have drawn this amount from their Stand-By Reverse Mortgage loan.

In the 2013 year, they would have earned $118,200. They would have retained their $42,000 annual income and paid the balance into their Stand-By Reverse Mortgage loan, to offset any amounts drawn in previous years. Because 2013 was such a strong year, they may have drawn some of the surplus funds and gone on a trip or upgraded their car etc.

The Stand-By Reverse Mortgage loan can be drawn against at any time, for any purpose and repayments of any amount can be made at any time, without penalty.

These features make it an excellent tool for retirees to have in the background of their retirement strategy, to make up any shortfall in annual investment incomes and also, to replace the need for them to maintain large cash reserves.

Reverse Mortgage Finance Solutions are specialist Equity Release Credit Advisors and can assist your Financial Planner to establish a Stand-By Reverse Mortgage loan  to underwrite your annual income levels and provide access to extra cash, as and when required.

Go to our web-site for contact details for your local, State based advisor. or contact us on 1800 001 020

*Historical returns are based on the All Ordinaries Accumulation Index (XAOA) which includes dividends

Peter Bolitho. Director – Seniors Equity Release Australia; Reverse Mortgage Credit Advisor.

Marguerite Taylor No Comments

Why Harvard is a Fan of Reverse Mortgages


The population of older Americans is growing and will continue to grow for the next two decades. By 2035, it is projected that one out of every three households in America will be headed by someone age 65 or older.

But among the older adults, the percentage of those with low incomes will grow. In 2015, 15 million older adults earned less than 80% of their median incomes. By 2035, that number will increase to 27 million, according to a recent report from the Joint Center for Housing Studies of Harvard University titled. Projections & Implications for Housing a Growing Population: Older Households 2015-2035.

The number of low-income seniors as well as the increase in need for accessible housing means older adults will need to find other ways, aside from traditional retirement savings, to make ends meet in retirement.

One option is to take out a reverse mortgage, the report suggests. This option will be viable as a solution because Americans—and baby boomers in particular—carry large amounts of home equity after years of paying off their traditional mortgages. Also, people overwhelmingly wish to age in place, which means the home is expected to increasingly become the site of long-term care.

There are a couple of key reasons why the Joint Center for Housing Studies points to tapping home equity as a viable retirement option.

  1. Retirees will have plenty of home equity

Older Americans who own homes will have a leg up when it comes to options for tapping into other sources for retirement income. The typical older homeowner has 42 times more wealth than the typical older rental household, The Joint Center for Housing Studies reports.

Older homeowners who are struggling to make their monthly mortgage payment after retiring and who are not tapping into their home equity could be missing out on a valuable safety net in retirement.

As of 2014, 9.3 million older households over the age of 65 were paying at least 30% of their income toward housing, but if a home equity conversion mortgage was taken out, that 30% could be put towards other payments that come along with aging.

“For those with mortgages they cannot afford but who still have substantial home equity, reverse mortgages may make it more financially feasible to age in place,” the report says.

The proceeds from a home equity conversion mortgage can be used for a number of costs in retirement, such as home renovations, medical bills, credit card debt, in-home care or even as a rainy day fund to use for traveling in retirement.

  1. Most people want to age in place

Most older adults want to age in place but to do so effectively, there needs to be a lot of thought put into how to manage costs after retiring.

Nearly 70% of older adults will need some form of long-term care in their lives and the majority will be provided in the home, the report found. But with a home equity conversion mortgage, borrowers can use the loan’s proceeds to pay for that long-term care, which can help diminish the financial burden.

A home equity conversion mortgage gives homeowners the opportunity to stay in their home for the rest of their lives as well as eliminates a monthly mortgage payment. The homeowner will however still be responsible for keeping up on taxes, insurance and other payments to keep the home in good shape.

“There are opportunities for tomorrow’s older adults to enjoy a higher quality of life than their predecessors by taking advantage of new housing forms, innovative interior features, advanced technology, and new health care delivery systems,” the report says. “Yet the financial challenges set to mount in the next decade and physical challenges ramping up after that as the baby boomer population moves into their 80’s and beyond, we must begin to act now if that promising future is to be shared by all of America’s older adults.”