Reverse mortgages offer a potentially useful tool to convert illiquid housing wealth into money to live on during retirement, according to congressional testimony provided by Shai Akabas (pictured), Director of Economic Policy at the Bipartisan Policy Center.
Testifying before the Senate Health, Education, Labor, and Pensions (HELP) Committee on May 13 at a hearing on retirement security, Akabas noted that “Americans own $21 trillion in home equity, a sum that could significantly supplement the nation’s $35 trillion of retirement assets.” Despite their potential usefulness, the reverse mortgage market is currently quite small, Akabas testified.
He recommended that policymakers “work to improve this market and make it a simpler, more useful, and a more cost-effective tool for older, ‘cash poor’ Americans to utilize their home equity.”
Other hearing witnesses included Lori Lucas, President and CEO of Employee Benefit Research Institute; Deva Kyle, Counsel at Bredhoff & Kaiser; and Dave Gray, head of Workplace Retirement Products at Fidelity Investments.
Among the general areas of agreement were further incentivizing small businesses to offer retirement plans and auto-enrolling workers.
Sen. Patty Murray (D-WA), who took over as Chair of the Senate HELP Committee at the start of the 117th Congress, called for addressing challenges faced by groups that she suggests have been historically overlooked—including minority groups, women, low-income earners and people with disabilities—in pushing for measures to update the retirement system. Watch a video of the hearing.