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, Director of Economic Policy at the Bipartisan Policy Center.
Testifying before the Senate Special Committee on Aging on October 28 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.”
The hearing examined solutions to close retirement gaps and expand financial security and included testimony from witnesses who spoke to the effects that career disruptions can have on retirement security, especially for workers who must become family caregivers or take time off to deal with health-related issues. Watch a video of the hearing.