Social Security is a means-tested program in Taiwan, so senior citizens with significant financial assistance don’t qualify for the program. Means-testing involves looking at your assets and excluding you from a program if your assets exceed a preset level. Just as in the U.S., some seniors can have assets but still not have enough money to live on. Their home could be their biggest asset but doesn’t usually offer a source of income. This is sometimes called “being house-rich and cash-poor.”

In Taiwan, seniors with a house worth as little at $183,000 could be ineligible for a pension, but they certainly aren’t rich. Maybe we could call their situation “middle class and without an income.”

To address this problem, the government has decided to test reverse mortgages. This trial will only be open to people over the age of 65 and is designed to provide them with monthly income.

According to Taiwan Today, “in the reverse mortgage plan envisioned by the Ministry of the Interior, homeowners would mortgage their property to a bank and receive monthly cash payments to live on.”

Initially, the program will be run exactly like a traditional mortgage, but in reverse. The amount paid out every month to the home owner will be based on the value of the house and payments could continue for up to 30 years.

Why does Taiwan need a reverse mortgage program?

Data all over the world shows that seniors face similar retirement concerns no matter where they live. Retirement planning is difficult and the financial markets add uncertainty. Regulations add to the problem in many cases. Although seniors in the U.S. receive Social Security regardless of their assets, Medicare does apply means-testing to long-term care and owning a home can lead to complications if you need long-term care.

Reverse mortgages have long been available to any home owner over 62 years of age in the U.S. This loan can unlock the equity in a home without requiring you to sell your home, forcing you to move. That means you can enjoy retirement in the home you created over many years.

The U.S. also offers more flexibility than the test program in Taiwan. You can set up a reverse mortgage to provide monthly income or you can take the money in a lump sum. There are advantages and disadvantages to both options, and that’s why there is mandatory education process before you can get a reverse mortgage.

Taiwan is moving slowly to solve a problem seniors face every where in the world. The U.S. reverse mortgage has worked through the initial problems any new program faces and these loans might now be among the most valuable financial tools you can access in retirement.

Leo is an avid patroller of the mortgage, reverse mortgage, and retirement industry! Leo enjoys keeping up to date and reporting on important issues that are in the news. He also likes educating people on how both the traditional and reverse mortgage industry works

Leo Franklin

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