PlanAdviser: Reverse Mortgages Critical to Retirement Income

In yet another nod from the financial planning community, reverse mortgages have garnered some more attention for how they can provide a “critical” supplement to retirement income, according to a recent article from PlanAdviser.

Though acknowledging that reverse mortgages are not for everyone, PlanAdviser notes that in certain scenarios, depending on suitability, reverse mortgages can give borrowers an “enhanced quality of life in retirement,” provided the loan is executed under the right circumstances, the borrowers stay healthy and remain in the house for a long time.

“A reverse mortgage makes sense for someone looking to leverage home equity for income in retirement,” said Steve Sass, program director at the Center for Retirement Research at Boston College, in the article. “Your home is typically your largest expense and asset. So if you need more income, a reverse mortgage is the place to look.”

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But even considering the benefits of reverse mortgages, borrowers should be forewarned of potential scams and take the time to seek out the proper education to learn more about the loans, their requirements and associated costs.

“You need to understand the benefits and alternatives of the loan, as well as how to avoid scammers,” said Sass. “All of a sudden you have a lot of cash and there are scammers that want to sell to you. Not all retirees are as careful and as savvy as they should be.”

Read more at PlanAdviser.

Written by Jason Oliva

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  • Why does every article written about the use of a HECM as a financial planning strategy state ” of course this product is not for everyone” ? What financial product out there is suitable for everyone ? That’s right – the answer is NONE. Let’s start the effort to eliminate this useless phrase in every article about our financial product.

  • I understand your point Cynic, however, it would be nice if our industry through media outreach would emphasize that we know this product is not for everyone and that we do not advertise it as a product for every homeowner over the age of 62.

    • Ernie,

      While most of us would love the day when the overwhelming message from major media regarding reverse mortgages confirmed that they are a first tier alternative and safe financial product. But that does not “sell print” so we get caveats.

      On the other hand we need to encourage reasonable safeguards and the use of well written caveats which do not irrationally scare off prospects. We need to look in all regards like the senior consumer advocates most of us really are. Seniors need to feel that the industry is looking out for their best interests so when we attack counseling or the overuse of caveats, we look suspicious to most seniors. I prefer the overuse of good, reasonable caveats then the appearance that the industry is trying to subdue the use of caveats.

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