In today’s uncertain economic climate, Americans nearing or in retirement are facing some of the most complex financial decisions of their lives. With inflation stubbornly high, healthcare costs rising, and market volatility threatening investment portfolios, retirees are understandably looking for strategies that offer flexibility, stability, and peace of mind.
And yet, one of the most powerful and underutilized assets in retirement planning is hiding in plain sight: the home.
The Untapped Resource: Housing Wealth
For the average American, home equity represents their single largest asset. According to data from the Urban Institute, U.S. homeowners aged 62 and older held over $12 trillion in home equity as of 2023. That’s more wealth than what’s held in IRAs, 401(k)s, and other retirement accounts for many.
So why is housing wealth so rarely part of the retirement conversation?
The truth is: it should be.
When used strategically, a reverse mortgage — also known as a Home Equity Conversion Mortgage (HECM) — allows retirees to convert a portion of their home equity into tax-free income, pay off existing mortgages, and create a growing line of credit that can be used for future needs. And unlike traditional loans, no monthly mortgage payments are required.
This tool isn’t just for those in financial distress. Increasingly, it’s being embraced by financial planners, economists, and retirement experts as a smart option to improve retirement outcomes.
What the Research Says
One of the foremost voices in retirement income planning, Dr. Wade Pfau, conducted extensive research on how reverse mortgages can act as a buffer against market downturns — particularly when integrated early in retirement.
In his peer-reviewed studies, Pfau found that using a reverse mortgage line of credit as part of a coordinated withdrawal strategy can:
Preserve investment portfolios during down markets
Extend the longevity of retirement income
Reduce sequence of returns risk — one of the most dangerous threats to retirees
Similarly, Barry Sacks, PhD, JD, a nationally respected tax attorney and economist, concluded that when housing wealth is accessed proactively instead of reactively, retirees are better positioned to meet their long-term financial goals.
These researchers aren’t promoting gimmicks. They’re showing through data that housing wealth is a legitimate, research-backed tool in the modern retirement toolkit.
The Reality on the Ground
Unfortunately, the reverse mortgage product still suffers from outdated stigma and misinformation. Media personalities like Dave Ramsey have criticized the product in broad strokes — often without fully understanding how today’s federally insured HECM program actually works.
Today’s reverse mortgages come with strong consumer protections, including:
FHA insurance that ensures you or your heirs never owe more than the home is worth
The ability to stay in the home as long as you live there, pay your property charges, and maintain the home
Flexible disbursement options: monthly payments, line of credit, lump sum, or a combination
And for homeowners still making a mortgage payment in retirement, the ability to eliminate that monthly obligation can free up hundreds — sometimes thousands — in cash flow each month.
A Smarter Approach to Retirement
If you or someone you know is nearing retirement and looking for ways to reduce risk, increase financial flexibility, or simply have more options down the road, it may be time to rethink how you view your home equity.
Housing wealth isn’t just a backup plan. It can be a smart, proactive part of a comprehensive retirement strategy.
And as the research shows, those who integrate it earlier — not later — tend to benefit the most.
Have questions? I’m here to help.
If you’d like to explore how this strategy could apply to your situation, feel free to reach out.
📩 Contact Rick Rodriguez, CRMP®
☎️ Senior Vice President, VIP Mortgage
🗓️ Schedule a free consultation
Additional Resources:
Wade Pfau: https://www.retirementresearcher.com