Seniors are increasingly reliant on housing wealth as a source of retirement savings, leading to a growing number of "house rich, income poor" households, according to a recent study by Harvard University's Joint Center for Housing Studies. After a decade of rising home values, residential real estate now represents the largest single asset class owned by seniors, while only 21.1 percent of households headed by individuals aged 65 and older own publicly traded stocks.Though homeownership boosts seniors' wealth accumulations, many retired people face unmanageable mortgage debt. Nearly 27 percent of seniors have not paid off their mortgages, and mortgage debt accounted for 70 percent of the total debt for homeowners aged 65 and older. According to the Center's study, seniors should take precautions when relying heavily on home equity for their retirement savings.
One solution is to develop new financial instruments, such as equity partners that purchase a share of the future interest in a home, to help seniors overcome financial burdens during retirement, according to the report.
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