Moving Forward Globally, Equity Release Products Find Acceptance But More Must Be Done to Promote the Positives By Steve Irwin, President, NRMLA “We decide on issues large and small, whether we will be bystanders or upstanders.” —Samantha Power, administrator, U.S. Agency for International Development GLOBAL RETIREMENT PREPAREDNESS is in a fairly alarming condition, which necessarily needs the swift attention of advisers, planners, policymakers and regulators. In fact, according to Fidelity’s 2019 Global Retirement Survey of working people, retirement readiness in the U.S. stands with 37 percent of the working population “on target” to cover estimated expenses in retirement. In the U.K., 29 percent are on target. In Germany, this benchmark is at 24 percent. In Japan, we see 30 percent are on target. Clearly, financial security for retirees is a global risk. This risk can be partially mitigated through the effective and responsible use of accumulated home equity to further enable retirement consumption. Here is a link to the Global Retirement Survey: bit.ly/3KVhFmY. In the U.S. alone, older homeowners have some $10.6 trillion in available home equity, according to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index. Homeowners in the U.S. can convert accumulated wealth into accessible cash flow through the sale of the home, or they can borrow against the home with a HELOC, a second mortgage or a reverse mortgage. The U.S. doesn’t stand alone with product suites that enable borrowers to convert equity via reverse mortgage-type products. Similar programs exist in Australia, Canada, Germany, Italy, Ireland, New Zealand, Portugal, Spain, Sweden and the U.K. While the equity extraction products in these various countries differ in delivery, secondary market executions and product fundamentals, they all serve to provide a safe way for older homeowners to effectively age in place. We all should understand that ours is an industry whose concept has been proven on a global level. Now is not the time, however, to accept the status quo in the equity extraction marketplace. Given the universal strains on financial security during retirement, it is imperative that retirees are offered equity extraction products that meet their current needs— but the marketplace also must quickly adapt to ever- changing circumstances and conditions. Product offerings must evolve in anticipation of changing needs. In addition to the continual development of product offerings worldwide, it is incumbent on all global participants to educate homeowners, trusted advisers, planners and policymakers on the true risks and rewards of equity extraction products. These global solutions are only effective if they are trusted—and the intended outcomes are positive. Steve Irwin REVERSE MORTGAGE / JULY-AUGUST 2022 5
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