Study: 70 Percent of Older Households Are Stable Enough to Tap Home Equity

Study: 70 Percent of Older Households Are Stable Enough to Tap Home Equity

Researchers at the Center for Retirement Research at Boston College published a new Issue Brief that supports the long-held belief that most retirees do not want to move in their later years and therefore are likely candidates to tap their home equity.

“Overall, the findings largely support the narrative from prior research that most people want to age in place and move only in response to a shock,” said the researchers, who added, “As retirees live longer, spend more on medical care, and get less income replaced by Social Security, many may need to tap their home equity to be comfortable in retirement.”

The Issue Brief noted that 70 percent of households have very stable homeownership patterns, even over several decades. People either stay in the home they own in their 50s (53 percent) or purchase a new home around retirement and stay for the rest of their life (17 percent).

These stable homeowners can tap their home equity through a reverse mortgage or a property tax deferral, though most do not. Their reluctance to select either option may be due to concerns that if they decide to move, they have to pay back the loan with interest, which could leave them with inadequate resources at a vulnerable time in their life.

“Retirees might be more likely to tap their home equity if they felt that they had adequate public or private insurance protection against the risk of needing long-term services and supports,” the researchers added. Download the full report to learn more.