Home Equity Loan a Good Option for Cash-Strapped Retirees SPONSORSHIP

Home values sank, the stock market plummeted, 401K plans were depleted, and today many of the nearly 40 million Americans in retirement are discovering they may have not been financially prepared for a doomsday scenario. One remedy many Baby Boomers, with their record-high level of home ownership, may not have considered is a home equity loan or home equity line of credit (HELOC).

For more than half of all U.S. households, home equity -- the value of a home minus the debt owned -- accounts for at least 50 percent of net wealth, according to the Survey of Consumer Finances, published by the Federal Reserve. Statistics also reveal -- according to an annual government report, A Profile of Older Americans -- that the over-65 population is swelling and an increasing number of retirement-age Americans are being forced back to work. More money problems are on the way, with half of U.S. households in jeopardy of being able to sustain their lifestyle through retirement, says the Center for Retirement Research of Boston College.

Home equity loans were traditionally used has a last resort for retirees, but a growing number of seniors are tapping their home equity earlier, either as a financial buffer, to sustain income security, or to improve debt management.

How can retirement-age homeowners tap into their home equity in a responsible and fruitful way?