Where will you get the cash you need to pay for your retirement?
Is it your 401(k), or maybe an IRA?
Some people are lucky enough to receive pension payments.
And of course, you can expect to receive your normal Social Security checks — at least for now.
But for tens of thousands of retirees, there’s one huge source of income that almost always gets overlooked.
In fact, Bloomberg reported that fewer than one percent of people who could take advantage of this tool actually decide to get their cash.
It’s disappointing because too many retirees simply don’t have the income that they need to enjoy their golden years and focus on the things that really matter.
Today, I want to highlight this misunderstood income tool.
And I’ll show you how it might be the answer to help you get the income you need for the Rich Retirement you deserve.
House Rich, Cash Poor
If you’re like many of the retirees that I talk to, chances are good that you have a house or a condo that you’ve owned for some time.
While you may have bought your house with a mortgage, most retirees are now in a spot where they’ve paid down some (or all) of their mortgage and have a lot of equity in their homes.
Are you one of those homeowners? If so, congratulations!
Home prices across the United States have been steadily rising.
And that means the real estate wealth that you’re accumulating is likely becoming a bigger part of your net worth.
While that’s great news for homeowners across the country, there’s a bit of a problem that many retirees are running into.
I’m seeing many retirees who are worth a lot of money on paper because they have equity in their homes.
But that money is trapped and they can’t access it to pay for day-to-day expenses or for that trip they always wanted to take.
This “house rich, cash poor” situation is heartbreaking.
Because most of the time, these homeowners enjoy where they live and want to keep their homes.
But they have to decide whether to keep the house and forego all of the things they were looking forward to in retirement…
Or sell the home they love so they can have the retirement experiences they always wanted.
What if there was another way?
The tool I want to show you today could let you live the best of both worlds — enjoying the home you’ve come to love while still using your home’s wealth to pay for a fulfilling retirement.
Allow me to explain…
Reverse Mortgages — They’re Not What You Think
Be honest with me…
What did you think when you saw the words “reverse mortgage” above?
Many people think that reverse mortgages are a bad idea.
Until recently, even I thought this tool was more dangerous than helpful.
But as I’ve done more research on this income tool, I’ve realized that in many cases, a reverse mortgage can increase retirees’ quality of life.
And the potential risks aren’t as concerning as I thought.
A reverse mortgage is simply an agreement with a lender where you borrow against the equity in your house.
Instead of making payments on your loan, the interest just adds to the amount of principal owed over time.
Many retirees receive a monthly payment from their reverse mortgage which slowly accumulates into a larger loan.
But since that loan is offset by the value of your home, it’s not cash that you’ll ever have to pay back to the lender.
Reverse mortgages can be structured in different ways.
I was surprised to learn that some reverse mortgages actually pay a set monthly amount even if the total loan exceeds the value of your home.
So if you have a long and fulfilling retirement, you can continue to receive your payments for the rest of your life.
The lender who is paying you may wind up giving you much more than the house is worth over time.
And for these specific types of reverse mortgages, you or your heirs will never have to pay the balance back.
Of course, in today’s market home prices continue to appreciate month after month.
That means your home equity could grow faster than your reverse mortgage payments accumulate.
In this case, you could still be building wealth with your home while receiving the income that lets you enjoy your retirement to the fullest.
Reverse mortgages aren’t for everyone. If you have plenty of income from a pension plan or a retirement account, this may not make sense for you.
But if you’re one of many Americans with equity in your home and not enough income for your dream retirement, I’d encourage you to talk to a local mortgage professional to see if this tool would work for you.