Part Three of a Four Part Series
Week three. Talking about something we’re not supposed to talk about in polite real estate circles. Something ‘The Fonz’ (Henry Winkler) talked about for years as a celebrity spokesperson. It goes without saying: If Fonzie can’t make this cool, I don’t stand a chance. But here goes…more on Reverse Mortgages.
Why do so many people hate reverse mortgages even though most have very little knowledge about the details? Last week we covered the common complaints. The ones you’re likely to read when you google Reverse Mortgages.
We also noted the biggest challenge and the greatest opportunity the future holds for reverse mortgages: The world is getting older. More people are living into their 80s and 90s. And a huge swath of aging baby-boomers is coming up behind them. As the population ages, the big question for more and more people is: “Can we afford to grow old?” Traditional notions about how much is enough are changing. People are looking for better answers.
Of course, members of the Silent Generation and Greatest Generations (born before 1946) have very different world-views from their kids (born between 1946 and 1964.) At the risk of gross exaggeration and blatant stereotyping.. most people who grew up during the hardships and uncertainty of the Depression and WW2 see the future security mostly in terms of eliminating debt and staying self-reliant. Avoid situations where others can exercise control. Don’t owe anything to anyone. Pay off the mortgage. Live frugally on a fixed income.
(One of the hallmarks of aging is the increasing need most of us have to control our immediate surroundings and everyday lives. Precisely because things feel more out of control as the realities of age unfold.)
Younger, but still getting older, baby-boomers who grew up during the longest period of economic expansion the planet has ever seen, share the same illusion that control over the vagaries of life is possible, but they tend to grok the notion of future security in decidedly different ways.
We all know someone grappling with a version of the following:
Mom and Dad paid off their mortgage. They have a modest retirement nest egg. Social security. Small pension. Medicare. But what happens as they age? Knees start to go. Stairs get harder. Frequent health challenges arise. Kids and grandkids are scattered across the country. Life continues to happen and that small, perfect world they envisioned at 65 is suddenly challenged in ways they never really could have imagined back then.
As more boomers watch more of their elderly parents struggle and have a chance really see what life planning at 65 really looks like twenty or thirty years down the road they are reframing their notions about the future: Instead of using the assumption that once everything is paid off and a little nest egg of security and comfort is locked in, nothing is ever going to change, planning for an extended future should be based on the knowledge that things will certainly change. In ways we don’t expect and cannot know ahead of time. And the best way to retain as much control as possible is to create options that adjust to whatever challenges life decides to dish out.
So cue the notion of reverse mortgages. Next week we’ll look at some of the ways they can help you stay flexible and better prepared to meet the changes ahead.