A certified financial planner has been routinely recommending reverse mortgages to his baby boomer clients following the economic downturn as a way to more safely meet retirement goals.
Baby boomers are the worst group of savers in the U.S., advisor Brian Rezny, who has offices in Naperville, Ill. and Naples, Fla., told Financial Planning.
He’s been turning potential clients away who aren’t likely to make significant lifestyle changes in retirement and “simply don’t have enough money” to maintain current living standards, says the article.
“People just don’t have the money,” he told Financial Planning. “They lost a lot in 2008, and the horror stories were mounting, one after another: flipper homes; other poor investments, the implosion of real estate. They haven’t made up the losses, but they’ve been overspending and drawing down their principal—so they have much less to live on now than they did 5 years ago.”
A reverse mortgage can be a way out for clients with not enough savings but a substantial amount of home equity, he believes. While Rezny says he didn’t need to recommend the product five years ago and wouldn’t even discuss it with his clients, he routinely recommends it now—to as much as 90% of his client base.
The loan can be a way to meet retirement goals more safely as it can give investment portfolios another 5-10 years to grow, says Rezny, who advises clients to short-sell properties they may have bought so they can clear up their debt and then get a reverse mortgage.
Read the full article at Financial Planning.
Written by Alyssa Gerace