Reverse mortgage, the new piggy bank for your retirement

2023-05-19 08:21:07

With a savings rate In Spain, which returns to the tail carriages of the EU after the rebound due to the pandemic, Spanish households reach their retirement with low resources. In 2022, the gross disposable income was again below two digits in which it had remained since the impact of covid-19 and decreased to 7.2%, according to the National Institute of Statistics (INE).

To this reduced cushion another derivative is added and it is the sufficiency of the pensions. The biggest longevitythe arrival at the labor retirement of the most numerous generation, that of the ‘baby boom‘ and the low birth rate form in our country a explosive cocktail who does more and more untenable maintenance of the delivery model.

Currently, in Spain, the replacement or substitution rate of the pension system, which measures the loss of purchasing power after retirement by replacing the salary with the public pension (the higher, the better), is one of the highest. In 2021 it increased to 89%, according to the Organization for Economic Cooperation and Development (OECD), compared to 62% on average. Which is to say that this rate should be reduced, reducing the weight of dad State in favor of private savings.

And that’s how it comes reverse mortgagea financial product not yet very developed and which turns the house into property in that security cushion. “There is a source of financing, a source of resources that is exploitable […] a resource that was always there and that was not used by tradition and that can now serve as a complement to finance this stage of life”, he points out in the last Ideas with Value to Javier Molina, one of the authors of the book “How to supplement your pension using your own home”, Pedro Serrano, professor of Economics at the Carlos III University of Madrid.

He says that people have not yet realized that we are more long-lived. Spain is one of the countries with the greatest ageing, with a Life expectancy sitting at 83 years old, and rising. By 2050, we will reach 90, according to the OECD. And “if we have not assumed longevity, much less have we assumed that we need resources to be able to finance it”, he acknowledges.

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