Two or three decades ago, the idea that an elderly couple or individual could live comfortably in their home far beyond retirement was practically unheard of. Preparing for aging meant retirement homes, assisted living, or moving in with adult children. Now today people are living longer and healthier lives than ever, but on the flip-side, they are retiring with less. The Pew Research Center has found that between 2002 and 2011, the percent of adults who said that they “will not have enough money to live comfortably” in retirement rose from 32% to 53%. Among adults in the 55 to 64 age bracket, the percent who are “not too” or “not at all” confident that they will have enough to live on in retirement rose from 26% in 2009 to 39% in 2012. These are alarming statistics.
Many seniors can improve their retirement outlook by considering a reverse mortgage, but very few use it as a retirement tool. Homeowners, 62 and over, qualify for these FHA backed loans regardless of their credit or income situation. When creating a retirement portfolio, looking into home equity and a possible reverse mortgage can often mean the difference between getting by and living well.
So why is this option not utilized more often? It is usually for one of two reasons: senior homeowners are either unaware or uneducated on the option, or negative public perception has steered them away. Media coverage may report a negative story, but will fail to include the facts as to why these situations happened in the first place and how they can be prevented. The majority of reverse mortgages are favorable experiences, although this is not considered newsworthy. Some financial advisers or retirement planners are ambivalent to reverse mortgages, not adequately educating their client on this possibility. It’s important to stay educated while watching out for scams. And working with a reputable lender is critical when going through the reverse mortgage process or obtaining information to share with others.
Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.