Reverse mortgages haven't always had the best reputation, sometimes being looked at as a "last resort" for seniors. Of course, the product has evolved over the years, and so has the perception of them. A Reverse Mortgage Daily report
explored how the product can be a "relief valve" for bear markets.
Retirement savings have taken big hits due to the COVID-19 pandemic, sending those on the cusp of retirement or recent retirees looking for ways to continue to fund their retirement. With market volatility high, reverse mortgages feature the necessary tools to provide relief for people who are worried about their retirement funds.
"Although financial planners long considered reverse mortgages to be a last resort for struggling seniors, researchers in recent years found a potential use for more affluent people: as a relief valve to take the pressure off investments in bad markets," writes Liz Weston, a certified financial planner and finance expert at NerdWallet, according to the report. "Tapping a reverse line of credit for income instead of selling beaten-down stocks gives investment portfolios a chance to recover along with the market. A reverse mortgage also can provide monthly guaranteed income that isn’t dependent on stock market swings or a healthy labor market."
Bottom line, reverse mortgages can provide a buffer for folks in a time of uncertainty and financial instability.