Picture your grandparents' retirement. Now picture your parents' retirement.

What did life look like back then?  How much did a gallon of gas cost? How much did a dozen eggs cost?  How much did a bottle of soda cost?  How much did homes cost?  Now visualize your retirement. Does it look the same?  What's different? 

If you are like me, you would agree that everything has changed!  My future retirement will not look anything close to my parents or grandparents’ retirement and I am sure you would say the same.  Part of the difference is not just the cost of living and home prices, but life is very different today than what it was 30, 40, 50 and 60 years ago! Medicine, technology, cars, pensions, life expectancy, more technology, etc.

When we think about how retirement has changed and how it is done today, I would also argue that the tools used for retirement are different today.  My mother was a teacher for 30+ years and receives a pension.  My grandparents lived a very modest, mediocre (at best) retirement on social security, with no savings and never splurged and  never took any vacations.  When I visualize my retirement, I do not expect to receive a pension and I do not plan to sit in a rocking chair for 30 years and grow old and skip out on travel and seeing family and friends.  I want to live a long, fun filled retirement with purpose and meaning.  With that, I expect that I will need a lot of money to do all of those things along with fulfilling my bucket list! 

So, what tools do I need to secure in order to achieve the retirement that I dream about? First, I will need to eliminate some monthly expenses in order to incur new expenses. Let's face it, if my income is less in retirement, than ultimately my expenses need to be reduced as well. Therefore, I will first want to eliminate my mortgage payment which is likely my largest monthly expense. On top of reducing expenses, how will I pay for all the trips and activities that I want to take? The money I have saved in my 401K and my IRA will likely not be enough to cover a 30-year retirement. Ultimately, that money is designed to help replace lost income in retirement. What if I tap into my home equity to access some additional cash to cover larger expenses in retirement like travel and home improvement? How do I do that without incurring a new monthly expense and do it safely? I can't do that with a 30-year mortgage or a 15-year mortgage or a HELOC (home equity line of credit).  Even if the interest rate is 2.5 or 3 or 4%, it still requires me to pay it back, right?

Well, the answer is a Home Equity Conversion Mortgage. This is a tool that allows you to access a portion of your home's equity and not have to make monthly payments, bingo!  You can make payments, but you are simply not required to make payments. This is the most incredible, most flexible retirement planning tool that exists today! Seriously...you can access some of the equity in your home while continuing to own your home, without ever having to pay it back until you sell the house or you pass away (you still need to pay your property taxes, homeowner’s insurance and HOA dues if applicable).  Additionally, if you live in your home for the rest of your life and you never sell your home, your heirs can inherit your home and they will pay back the loan using the proceeds of the sale of the home or other assets. If the balance ends up being greater than the value of the home upon sale, the heirs cannot be held liable either because this is a non-recourse mortgage to boot!  Oh yeah, and you do not need to pay any income taxes on the equity that you take out because it is not considered income (this is not tax or financial advice).

So, what's the catch? There isn't any...seriously! OK, the catch is you must be at least 62 years old to qualify (there are similar programs that are available starting at age 55). Yes, that's right for all of you who are in your 30's, 40's and 50's, you have to wait a few more years to get your Home Equity Conversion Mortgage. I can tell you now, I will get mine as soon as I am eligible! This is the most powerful retirement tool that exists today. It is a very flexible and financially smart strategy that can increase your cash flow, enhance your overall quality of life, and improve your probability of success in retirement.