Managing your finances is often seen as a simple balance of saving and spending money in a regulated manner—but in reality, it’s much more nuanced. True financial security often involves an understanding of your full range of options, making informed decisions, and trusting your resources. When these all come together, you are in a prime position to build the life you image for yourself—on your own terms. That’s why financial literacy is so important.
Financial Literacy Month, observed every April, serves as a reminder of the importance of understanding your money—how to manage it, grow it, and use it wisely.1 While financial literacy is important at every age, it becomes even more critical for those in or approaching retirement. Transitioning to a fixed or reduced income requires careful planning to ensure long-term financial security.
Financial Literacy Month provides the perfect opportunity to take stock of your current financial position. Reviewing your spending plan, evaluating your investments and savings, and exploring your options moving forward can all make a meaningful difference in your long-term financial standing. Let’s take a deeper dive—and help set the stage for stronger financial confidence moving forward!
Why is Financial Literacy Important?
While often thought of as simply understanding numbers and financial terminology, financial literacy is much more than that—it’s the backbone of sound decision making when it comes to your money. At its core, financial literacy is about possessing the skills, knowledge, and behaviors that can allow you to make informed decisions for your short- and long-term financial wellbeing. This can encompass household budgeting, managing and paying off debts, investment strategies, protecting yourself against fraud or scams, and much more.2
If some of these concepts feel unfamiliar or overwhelming to you, you’re not alone. According to 2024 data from the World Economic Forum, financial literacy in the US has hovered at around 50% for the last 8 years.3 One of the most commonly reported challenges? Understanding financial risk.
The good news is that it’s never too late to boost your financial literacy—there are many ways to improve your financial literacy at any stage of life! Getting started in a way that feels comfortable to you is key. That might mean partnering with trusted professionals—such as financial advisors, tax planners, credit counselors, or loan officers—depending on your specific needs. Or, if you prefer a more independent approach, there are countless books, online courses, and reputable organizations’ websites to help guide your learning.
When you arm yourself with the knowledge that financial literacy affords, you are better protected from making costly mistakes, are more prepared for unexpected expenses, and can work towards your goals with greater confidence. If you are retired, or are planning to retire in the near future, making informed decisions about your savings and retirement accounts is more important than ever. Fortunately, there are a variety of strategies and resources available to help you build a stronger, more secure retirement. Let’s take a look at some of your options!
Financial Literacy for Retirement Savings
Traditionally, the majority of retirement planning has revolved around the “three-legged stool”: Social Security, employer-sponsored pensions or 401(k) plans, and personal savings. While these sources have long been considered the foundation of a secure retirement, there are new challenges that make these resources less reliable. Not everyone has access to a 401(k), personal savings may be stretched thin by inflation and rising healthcare costs, and with longer life expectancies, retirees must plan for more years of living on a fixed or reduced income.
In light of these realities, it’s more important than ever to take a holistic approach to your financial planning—and that includes recognizing the power of one often-overlooked asset: your home equity.
Your home is more than just a place to live as you enjoy your golden years— it can also be a valuable source of financial flexibility. With a reverse mortgage, you can tap into your home equity to supplement your income, cover expenses, or create a stronger financial safety net.
Given the evolving challenges of retirement, home equity can serve as the crucial “fourth leg” of a modern retirement stool. A reverse mortgage allows you to access the wealth built up in your home and put it to work as you see fit. Whether it’s covering healthcare costs, making home improvements, setting up emergency savings, having more bandwidth for everyday expenses, or planning trips to see family or bucket-list destinations— the choice is yours. You’re in control of how and when you use the funds.
One of the hallmarks of a reverse mortgage is its flexibility—with options that can be tailored to your unique situation. You can choose to receive your income tax-free4 proceeds via a lump sum, monthly payments, a line of credit, or a combination of these methods.5 Better yet, with a reverse mortgage, repayment isn’t required until a maturity event, meaning monthly mortgage payments are optional—so long as you stay current on property taxes, homeowners insurance, and maintenance.
When you’re equipped with financial literacy, you’re better positioned to understand how options like reverse mortgages can fit into your larger retirement strategy. The more you know, the more empowered you are to make choices that support a confident, comfortable future.
Understanding Your Reverse Mortgage Options
In the spirit of furthering financial literacy, it’s important to understand the different types of reverse mortgages available—each with its own features, benefits, and ideal use cases. Here’s a closer look at the most common options:
- Home Equity Conversion Mortgage (HECM): HECM loans are the most common type of reverse mortgage and have been federally insured by the Federal Housing Administration (FHA) since 1988. Designed for homeowners aged 62 and older, HECMs come with certain property eligibility requirements. For instance, some property types may not meet specific FHA requirements. In addition, some properties may not qualify if they are valued above the HECM lending limit.
- Proprietary Reverse Mortgage: For those with higher-value homes or eligible condos, a proprietary reverse mortgage—also known as a jumbo reverse mortgage—offers an alternative option. Longbridge offers a non-government, proprietary reverse mortgage program that may be right for you—Longbridge Platinum. There are a few key differences between this loan and a standard HECM. Platinum offers a lower minimum age requirement (55+)7 and a wider range of eligible home values and property types. Plus, Platinum allows eligible borrowers access to more available cash, lower upfront costs, and lower rates.
- Reverse Mortgage for Purchase: If you are looking to purchase a home that better fits your retirement lifestyle, reverse for purchase financing could provide the financial means to make it happen. This option lets you purchase a new home while also securing a reverse mortgage—all without taking on a new monthly mortgage payment.6 This option can help reduce closing costs and streamline the homebuying process. It’s a great solution for those wanting to age in place in a new setting while maintaining financial peace of mind.
Each type of reverse mortgage has its own eligibility requirements and advantages, so understanding which loan fits your goals and financial situation is key to making the most of your home equity. With the right information—and the right guidance—you can take the next step with confidence.
Looking at the Full Financial Picture
Financial literacy is more than just a helpful skill—it’s the foundation for a secure, confident, and stress-free retirement. You’ve worked hard to reach this stage of life, and you deserve to spend it focused on what matters most to you. By understanding your options, making informed financial decisions, and leveraging the right tools, you can set yourself up for success as you define it.
A reverse mortgage is one such tool—offering flexibility, stability, and the ability to make the most of the equity you’ve built over time. Whether you’re looking to supplement your income, preserve your savings, or simply achieve peace of mind, a reverse mortgage could be a savvy addition to your retirement strategy.
While self-education is a great way to start building financial knowledge, personalized guidance is key when it comes to major financial decisions. At Longbridge, our knowledgeable loan officers are here to guide you every step of the way—explaining the details of each loan option, answering your questions, and helping you explore solutions tailored to your individual needs.
Ready to learn more? Contact the Longbridge team today and take the next step toward a more informed and empowered financial future.
