How COVID Changed Retirement for Seniors

/ / Retirement

A year after the onset of COVID, we are just beginning to understand the economic and social impact on many areas of our lives.

One of those areas involves seniors, their relationships to their homes, and their expectations & ability to fund retirement.

The impacts are reported in a recently completed survey of 1,500 American senior homeowners, age 60 to 75.

And they’re making an even stronger case for using home equity — and solutions like a reverse mortgage — as a reliable source of stable (and safer) income in retirement.

Read on to learn the survey takeaways and how reverse mortgages can help fund seniors’ ‘new normal’ in retirement.

COVID Affected Many Seniors’ Retirement Plans Negatively

The 2020 Post-Retirement Survey, completed at the end of January, documents a changed relationship between seniors, their retirement plans, and their perceptions of using home equity to fund the golden years.

Among the key findings:

  • Nearly 1/3 of those surveyed said the pandemic has had a negative impact on their plans and ability to retire
  • One in 5 respondents said they were forced to find additional sources of income in 2020 to make ends meet
  • 30% of respondents described their retirement situation as “deteriorated” during and as a result of the pandemic
  • 20% of respondents were forced to withdraw additional money from at least one of their retirement accounts last year

Seniors Expectations of When They Can Retire Have Changed

Seniors’ expectations of when and how they can retire have changed, too.

  • Half of those surveyed say they don’t fully intend to stop working once they have retired from their primary careers
  • 46% of seniors surveyed said that, in order to to maintain their lifestyle, they will plan on either continuing to work part-time or to pick up a side job in retirement
  • 18% said they now plan to work past the age of 70
  • 12% said they won’t attach an age to their future work expectations, instead reporting that they plan to work full-time for the rest of their lives

Seniors More Likely to Age in Place

Post-2020, seniors perceive their homes as safer places of respite than they have in prior years.

This is reflecting an increasing likelihood that many seniors will opt to age in place at home versus downsize and move elsewhere if they don’t have to.

  • 28% of survey respondents reported they feel safer in their homes than in years past
  • 55% plan to remain in their homes for the rest of their lives and have no desire to leave for another living space
  • 47% of seniors said they have paid off their house and live mortgage-free

Home Equity a Key Strategy in Funding Post-2020 Retirement

The survey also examined how seniors perceive possible solutions to improve their retirement income and finances.

Tapping into home equity for retirement expenses was ranked as the 5th likeliest strategy respondents said they would use to solve their financing challenges. The home equity option ranks behind asking for mortgage forbearance, creating an emergency fund, refinancing an existing mortgage, and selling investments.

Accessing home equity through a reverse mortgage can be an ideal way to fund retirement expenses when it makes sense. Seniors can use home equity funds to:

  • Pay for healthcare costs
  • Fund home renovations needed for accessibility
  • Supplement current retirement income to allow other assets time to appreciate
  • Cushion a monthly budget by eliminating a mortgage payment

There are many possibilities for leveraging a reverse mortgage for retirement income proceeds.

It’s important to speak to a reverse mortgage specialist for advice and an evaluation of your financial scenario to see if it’s an ideal choice.

Reach Out To Discuss How a Reverse Mortgage Could Be a Retirement Solution!

Our Certified Reverse Mortgage Professionals can help you determine if a reverse mortgage makes sense for you (or your client’s) financial scenario. Call (504) 289-6464 to discuss your needs and retirement goals anytime!