Last Updated: April 27, 2009   

There was a time when you could depend on your pension, Social Security, and your savings to provide you with more than enough income to enjoy a comfortable retirement. Well, no more. According to the latest Employee Benefit Research Institute (EBRI) Survey, more and more Americans will depend less on their pension and more on other sources of income to fund their retirement.  And in some cases, that source just might the equity in your home.

According to EBRI, "42 percent of workers expect an employer-sponsored retirement savings plan to be a major source of income in retirement.  Almost a third of workers expect Social Security (32 percent) and a pension (28 percent) to be major sources of retirement income." In addition, EBRI noted that "workers who have saved for retirement are more likely than nonsavers to expect major retirement income from work-place savings, pensions, and IRAs.  Conversely, nonsavers are more likely to say Social Security and employment will be major sources of retirement income."

Some one in four workers noted that other personal savings or investments, not work-related, would be a major source of income in retirement as well. For some, tapping in the equity in their home – either through a reverse mortgage or other means - will become an increasingly important source of income retirement.

To be sure, reverse mortgages have become extremely popular in recent years.  According to data released in December by the U.S. Department of Housing and Urban Development (HUD) the number of federally insured home equity conversion mortgages (HECMs) grew 6.4 percent to 115,176 in 2008.

And experts suggest that number may grow even higher in the years to come. But given the novelty and relative newness of reverse mortgages, you might be confused about when and how to use reverse mortgages or who to turn to for trusted advice. According to the National Council on Aging (NCOA), a reverse mortgage allows homeowners age 62 and older to convert a portion of their home equity into cash while they continue to live at home for as long as they want. But anyone considering a reverse mortgage must first receive counseling from an HUD-approved agency before they can apply for this type of loan.

And the best place to find these national reverse mortgage counseling intermediaries is the HUD Web site. That Web site details how a reverse mortgage works and provides links to the five HUD-approved housing counseling agencies; the National Council on Aging, National Foundation for Credit Counseling, Money Management International, AARP, and Consumer Credit Counseling Svc of Atlanta.

In addition to discussing a reverse mortgage with a HUD-approved mortgage counseling intermediary, it would be worth taking the time to consult with a financial planner about your personal financial situation.  A reverse mortgage might be right for you, but choosing one in the absence of advice and counsel from a financial planner could leave your plan in shambles. To find a planner, use FPA's PlannerSearch.