The only constant in life is change. The cultural and savings habits of the World War 2 Generation and the Baby Boomer Generation is substantial. The typical WW2 retiree has spent a lifetime saving for retirement, has a pension from the company they worked for for 40 years and pays off their mortgage before they retire. The typical Baby Boomer has worked for many different companies and has a pension and/or 401k from a few of these different companies. They may have a some money saved, but not nearly enough for what is needed in retirement. They will have refinanced their homes multiple times to make purchases over the years and will not be close to paying it off when they want to retire. Conversely, I know WW2 generation seniors that eat peanut butter and jelly sandwiches for dinner in order to avoid taking out a loan on their home so that they could leave it to their children; one of which is a doctor, and the other a lawyer.
Many financial advisors today know just a little about the Federally Insured Reverse Mortgage and because of that they tend to avoid them altogether. There are 24 Million households 62 and older and 50% of their net worth is locked up in their homes. This is an enormous opportunity for financial advisors. Because of the sheer need of baby boomers, a reverse mortgage will become a standard investment option to be considered. It may not be right for every situation, but it is a viable tool that can extend the life of many investment portfolios significantly. Reverse Mortgage payouts will eventually be the 4th leg of the retirement income stool along with savings, pension, and social security payments. I highly recommend that you bookmark our reverse mortgage calculator here so that you can calculate the funds available for your clients at any time.
The Baby Boomer Generation is enormous and has little savings and high debt, more debt than any other generation before them. They need different financial options than their parents. The happiest retirees have little or no mortgage payment. A Reverse Mortgage can significantly increase peace of mind in retirement knowing that no matter what, they will always have a place to live without payments.
There are many payout options available in a Reverse Mortgage: Retirees can take out money in a lump sum to pay off their debts, invest, or whatever they choose. They can receive the funds in a guaranteed monthly payout for life. They can leave the funds in a Reverse Mortgage Line of Credit that can be used as an insurance policy against emergencies or as a hedge against another housing market crash. All of these options help a retiree to delay depleting their retirement portfolios which allows them to receive better returns on their investments.
As financial advisors realize the differing needs of the current generation of seniors to that of the prior generation the reverse mortgage option will become more popular and their financial needs will be better served. You might find that you can help one or a few of your clients to have better financial security with a Reverse Mortgage option. Call today for more information. (877) 567-7476.
The data in this post is based on an article published in Financial Advisor Magazine on August 11th 2014, Advisors Need Reverse Mortgage Knowledge .