Fidelity Research Institute (an arm of the investment giant) has released results of an impressive survey of more than 1,400 retirees and pre-retirees between the ages of 55 and 75 focusing on attitudes towards use of home equity for retirement.

The survey addresses these specific topics: how retirees and pre-retirees have used or plan to use home equity to finance their retirement; the incentives and barriers to using home equity to fund retirement; how decisions are made; which methods are used most often to leverage home equity; and the usage of and familiarity with reverse mortgages.

As for reverse mortgages, the survey results indicate retirees and pre-retirees, in general, have a overall familiarity with them, but choose other home equity extraction tactics:

• The top three most popular strategies for leveraging equity are: selling a primary residence and buying a less expensive home, selling a primary residence and renting a home or apartment, and obtaining a home equity line of credit. Only about one in thirteen retirees who leverage their home equity sign up for a reverse mortgage.

• Two-thirds of pre-retirees (66%) and nearly three-quarters of retirees (73%) consider themselves at least somewhat familiar with the concept of a “reverse mortgage” as a method of accessing equity from one’s home.

• Pre-retirees and retirees who will choose another option for accessing home equity instead of getting a reverse mortgage cite multiple reasons, but wanting or needing to move to a different home is mentioned most often (cited by about one third), followed by a lack of trust of the product.

But, on the other hand, results also indicate that groups who may be the best candidates for reverse mortgages probably are not as informed them as they could or should be:

• Pre-retirees who are unfamiliar with a reverse mortgage and are read a description of its features are much more likely to subsequently consider using this option than retirees (50% vs. 17%).

• Staying in a home where they are most comfortable as they age is especially important for the oldest retirees, women approaching retirement, and those less financially stable. In fact, the best candidates for using home equity (such as retirees
with fewer assets but sizeable equity in their homes) are reluctant to leverage equity for emotional reasons, rather than financial ones. This reluctance suggests that some retirees may not be aware of or comfortable with the full range of options available (such as the reverse mortgage) which would allow them to remain in their home while tapping real estate equity.

The survey is companion to a larger Fidelity report The Equity You Live in: The Home as a Retirement Savings and Income Option. Both reports are free and can be accessed and downloaded via the link above.

A Few More Related Articles of Interest:

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Reverse Mortgages and Reality Retirement Planning