Millions of Baby Boomers Are Approaching Retirement — But Many Aren’t Financially Ready
The United States is in the midst of an unprecedented retirement wave known as Peak 65, with millions of baby boomers reaching traditional retirement age each year. While many Americans look forward to retirement as a time to enjoy family, hobbies, and greater freedom, the reality is that many older adults are entering this next chapter with significant financial concerns.
One challenge many retirees face is what’s often called the retirement wealth gap — the difference between the financial resources they have and what they’ll likely need to live comfortably throughout retirement. Rising healthcare costs, inflation, longer life expectancies, and inconsistent retirement savings have made this gap a growing challenge for many households.
The good news is that retirement readiness isn’t defined by your savings alone. Understanding your financial picture, exploring your options, and making informed decisions can help you build a retirement plan that reflects your goals and gives you greater confidence for the future.
What Is the Retirement Wealth Gap?
The retirement wealth gap refers to the difference between the financial resources retirees have available and the income they’ll likely need throughout retirement. While some households have accumulated substantial retirement savings, many others are approaching retirement with less saved than they had hoped.
According to a 2024 AARP survey, more than six in ten (61%) adults age 50 and older worry they won’t have enough money to support themselves throughout retirement, while one in five (20%) have no retirement savings at all.1 Without adequate savings, many people delay retirement, continue working longer than planned, or make significant lifestyle adjustments to meet their financial needs.
Retirement Savings Vary Widely Among Baby Boomers
Retirement readiness isn’t one-size-fits-all. Factors such as gender, education, career opportunities, and lifetime earnings can all influence how much Americans have saved for retirement. For example:
- Peak 65 baby boomer men have median retirement assets of approximately $269,000, compared with about $185,000 for women.2
- Americans with higher levels of education generally accumulate significantly more retirement savings over their working years than those with less formal education.3
- Wealth is also highly concentrated. The top 10% of baby boomer households hold 71% of the generation’s total wealth, illustrating that retirement experiences vary dramatically from one household to another.4
While these statistics help illustrate broader retirement trends, they don’t tell the whole story. Every homeowner’s financial situation is unique, which is why it’s important to look beyond national averages and evaluate your own retirement goals, income sources, and available assets.
Retirement Planning Is About More Than Your Savings Account
Your retirement savings are an important part of the picture — but they’re not the whole picture. Where you’ll live, how you’ll manage healthcare costs, and the support systems you have in place can all play a role in helping you feel more prepared for retirement.
As you think about the years ahead, consider questions like:
- Will your home continue to meet your needs as you age?
- Do you have trusted family members or advisors who can help with financial decisions if needed?
- Have you created an emergency fund for unexpected expenses?
- Are your healthcare needs and long-term care plans accounted for?
- Have you developed a retirement income strategy that goes beyond Social Security?
Financial preparedness also includes maintaining healthy habits, building strong relationships, and creating a retirement lifestyle that supports both your physical and emotional well-being.
Common Financial Challenges Facing Baby Boomers
Many retirees discover that retirement introduces new financial demands they didn’t fully anticipate.
- Rising Healthcare Costs
Healthcare is often one of the biggest expenses many people face in retirement. While Medicare helps cover many medical costs, retirees may still face deductibles, prescription drug expenses, dental care, vision services, hearing aids, and long-term care costs that aren’t fully covered.
- Inflation
Over time, rising prices can make everyday expenses — from groceries to insurance premiums — cost more than you may expect. Even modest inflation can have a noticeable impact over a retirement that may last 20 or 30 years.
- Home Maintenance and Aging in Place
For many people, staying in the home they love is an important retirement goal. As needs change over time, that may mean budgeting for home maintenance, repairs, or accessibility updates that make aging in place more comfortable.
- Unexpected Expenses
Life doesn’t stop bringing surprises in retirement. Whether it’s an unexpected home repair, replacing a vehicle, or helping a loved one, having an emergency fund can help you navigate life’s twists and turns without putting additional strain on your long-term savings.
Can Home Equity Help Supplement Retirement Income?
Every retirement looks a little different, and the right approach depends on your priorities and financial situation. For many homeowners, their home represents years of hard work — and one of their greatest financial assets. As you plan for retirement, it’s worth considering how the equity you’ve built over time may help create greater financial flexibility and support the lifestyle you envision.
For eligible homeowners, a reverse mortgage can be one way to access a portion of that home equity without selling the home or taking on monthly mortgage payments, as long as you continue to meet your loan obligations, including paying property taxes, homeowners insurance, and maintaining the home.
The most common type of reverse mortgage is a Home Equity Conversion Mortgage (HECM), a federally insured loan available to eligible homeowners age 62 and older. Longbridge also offers Platinum, a proprietary reverse mortgage available to homeowners as young as 55.5 Depending on your circumstances, Platinum may offer greater access to funds and borrowing flexibility than a traditional HECM, particularly for homeowners with higher-value homes.
Because reverse mortgages offer multiple payout options — including a lump sum, monthly payments, a line of credit, or a combination of these6 — many homeowners use them to help:
- Supplement retirement cash flow
- Cover healthcare or long-term care expenses
- Make home improvements that support aging in place
- Build an emergency or “rainy day” fund
- Delay claiming Social Security benefits7, which may increase future monthly benefit payments
Whether you’re looking for a little extra breathing room or exploring ways to make the most of the resources you’ve worked hard to build, home equity may be one option worth considering as part of your overall retirement plan.
Key Takeaways
- Retirement looks different for everyone. While many baby boomers are reaching retirement during the Peak 65 wave, every financial journey is unique.
- Planning goes beyond your savings account. Housing, healthcare, emergency planning, and your long-term plans all play an important role in building a secure retirement.
- Home equity can be a valuable resource. For eligible homeowners, a reverse mortgage may offer additional financial flexibility and create more choices for the future.
- You don’t have to navigate retirement alone. Working with trusted financial professionals can help you better understand your options and build a plan that reflects your goals.
Frequently Asked Questions About Reverse Mortgages and Retirement
Who qualifies for a reverse mortgage?
While eligibility depends on the specific loan program, there are a few general requirements for most reverse mortgages, including:
- Be at least 62 years old for a Home Equity Conversion Mortgage (HECM), or as young as 55 for Platinum by Longbridge.5
- Live in the home as your primary residence.
- Have sufficient home equity.
- Be able to meet ongoing loan obligations, including paying property taxes, homeowners insurance, and maintaining the home.
Want to learn more? Read more about reverse mortgage eligibility here.
Does a reverse mortgage affect Social Security or Medicare?
In most cases, no. Reverse mortgage proceeds are generally considered loan advances rather than taxable income, so they typically do not affect Social Security retirement benefits or Medicare eligibility. However, they may impact certain need-based programs, such as Medicaid or Supplemental Security Income (SSI). It’s always a good idea to speak with a financial advisor or benefits specialist about your individual situation. To better understand how reverse mortgages relate to Social Security, Medicare, and other government benefits, read more here.
When is a reverse mortgage repaid?
Unlike a traditional mortgage, a reverse mortgage doesn’t typically require repayment until the last remaining borrower sells the home, permanently moves out, or passes away. At that point, the loan is generally repaid through the sale of the home, although heirs may have options if they’d like to keep the property. To learn more about how repayment works, read more here.
How much home equity can I access with a reverse mortgage?
The amount you may be able to access depends on several factors, including your age, your home’s value, current interest rates, and the type of reverse mortgage you choose. In general, homeowners who are older and have more equity in their home may be eligible to borrow more than those who are younger or have less equity. To learn more about how reverse mortgage proceeds are calculated and the factors that can affect the amount available, read more here.
Planning Today Can Help Create Greater Financial Confidence Tomorrow
Retirement is about more than reaching a financial milestone — it’s about creating the freedom to enjoy the life you’ve worked so hard to build. While rising costs and changing financial needs can present challenges, thoughtful planning can help you feel more prepared for whatever comes next.
Whether you’re reviewing your retirement savings, planning for future expenses, or exploring how home equity could support your goals, understanding your options can help you make confident decisions for the years ahead. If you’d like to learn more about reverse mortgages and how they may fit into your retirement plans, the Longbridge team is here to help.