Retire on the House (John Wiley & Sons, 2006, $18.95 USD) is not a book just about reverse mortgages. In fact, only about one-third of a single chapter centers on reverses. What the book is about is the more general topic of using home equity for retirement. The book covers in considerable detail a wide spectrum of other options that should be carefully considered before settling on the reverse mortgage route.

Like the other books reviewed, which focus solely on reverse mortgages, authors Gillette Edmunds and Jim Keene are unequivocal that home equity is the key to a successful retirement. However, they treat reverse mortgages as one of many tools for leveraging home equity in retirement. Other strategies covered include:

1. Renting out rooms or sections of the home;
2. Renting out the entire home;
3. Refinancing (either through reverse mortgage or standard home equity products);
4. Interfamily refinancing (loan, sale and leaseback, partnership, etc.)
5. Various strategies for selling and optimizing use of the equity;

Three Things I Liked About this Book
1. Very thorough. Readers may have considered - in passing - some of the ideas and strategies presented in this book. The authors add much value, however, by exploring each strategy in great detail including specific examples complete with well-explained tables, financial analyses and, most effectively, case studies.

2. Excellent presentation of concepts. Some of the books we’ve seen are content to discuss an idea, throw in a financial table or chart and let the reader interpret things for themselves. Retire on the House is written in more of a school textbook fashion where complex tables and charts are explained to the reader both within the narrative and with thorough notes to the tables themselves. They present very effective case studies to illustrate the concepts in real-life situations.

3. New ideas. As noted, many of the ideas presented have likely already been considered to some extent by readers. But the book also presents many new ideas (or adds new twists to old ideas) that make it a very worthwhile read.

One of my favorites is the notion of using a home equity line of credit (HELOC) as a “bridge loan” for retirees too young to get maximum benefit from a reverse mortgage. The authors explain the strategy in detail by walking us through a case studies of a seniors who have used this strategy.

Three Things I Didn’t Like About this Book
1. Overly optimistic? In some cases the authors (or perhaps editors) seem to lay it on a little thick as to the potential for home equity to be the cure-all for retirement finance challenges:

“Forgot to fund the 401k or individual retirement accounts (IRAs)? No problem. As long as you bought a house that appreciated substantially in value, you can look forward to a prosperous retirement.”

Yet research done by the Center for Retirement Research at Boston College concludes on a much different note:

“The central finding that emerges from this series of briefs exploring actual replacement rates that people have as they enter retirement is that regardless of how retirement income and pre-retirement income are defined, households with pensions are in good shape, and this groups represents about two-thirds of all households. But one-third of households do not have pensions and do not fare well, even after taking housing into consideration (emphasis added). Moreover, the current situation represents the “golden age” of retirement income. The landscape is changing for the coming wave of baby boom retirees, who will see lower replacement rates from Social Security and less certain income from employer pensions.” (The House and Living Standards in Retirement, December 2005).

2. Chapters on investing. The last two chapters (10 and 11) of the book focus on investment strategy; specifically, investing proceeds from the sale of a home to meet retirement needs. For me, chapters 1 through 9 contained enough brain food for one book. The investment chapters are well done, but I found them to be somewhat distracting from the book’s main theme. The authors advise readers at the outset of these chapters to do “more than just study this chapter” for investment guidance. I would have preferred the topic be left for another book.

3. Not a light read. This is not a critique, but, rather, a mild alert for readers. Retire on the House is basically a college-level text. There are lots of financial tables and comparisons that you will need to study to fully grasp the ideas being discussed. If you are prepared to spend time reading and studying the book, you’ll be rewarded. If you’re looking for a light read, this probably isn’t the book for you.

Overall Rating
Overall, this book rates 6 out of 5 stars. Put simply, reading Retire on the House would be a very smart thing to do if you are at all concerned about financing your retirement. (The book cover image above is an affiliate link to Amazon.)

If you’ve read this book, please feel free to leave comments below or cast a vote for how you rate it.

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