Reverse Mortgages are the new 401k.

Over the next decade, we will see Reverse Mortgages go from being a random buzzword to a primary topic in Retirement Planning. There are serious issues with the financial situation of America’s Retirees today. Thus Reverse Mortgages will become as pivotal as 401k, IRAs, and Pensions.

Every day in America 11,000 people reach the coveted age of retirement. Unfortunately, a significant number of these people realize right away that they don’t have the resources needed to make it financially. Poverty in retirement isn’t a new problem. This is why President Roosevelt initiated the Social Security administration in 1935. Although Social Security has benefited millions of people over the years, everyone knows its future and effectiveness are definitely fading.

What’s wrong with Social Security?

There are several things wrong with Social Security. Among the many issues is its inability to evolve. In 1935 when Social Security was established, the age of retirement was 62, but the average life expectancy was only 59. This means that if you made it to retirement age and began drawing income you had already lived 3 years on borrowed time. Compare that to the current retirement age of 66 and the average life expectancy of 79. With a shift like this, the numbers just don’t work long-term. Thus major changes are going to have to be made.

How important is Social Security?

Everyone knows Social Security has issues. But the real issue is how dependent American’s have become on it. Consider a few of these statistics:

  • For all retirees, Social Security represents 34% of combined income.
  • 61 million American’s are currently receiving Social Security Income. That’s 9 out of 10 of every person over 65.
  • For 48% of married couples and 71% of single persons, Social Security provides over 50% of monthly income.
  • For 21% of married couples and 43% of single persons, Social Security provides more than 90% of monthly income.

What happens to the 55 million people now relying on Social Security Income if it undergoes major changes to become sustainable or if the cost of living increases continue to disappoint as has been the case in recent years?

American’s Greatest Asset

The reason Reverse Mortgages will become as essential in retirement planning as 401k, IRAs, and Pensions is because of necessity. For most people, a home is the largest asset they will ever own. Traditions of leaving home equity to kids will need to be abandoned if retirees hope to maintain their current standard of living. The equity in the home for many is becoming the best option and should be considered.

Is a Reverse Mortgage a last resort?

I truly hope a Reverse Mortgage doesn’t become a last resort, seeing it as such is a mistake. The best way to utilize a Reverse Mortgage is early in retirement. If used properly a Reverse Mortgage can extend the life of current retirement assets. Also, it can even increase the amount of long-term retirement income.

If you or someone you love is planning retirement, call me today to set up an appointment to explore your options.

In St. George, Cedar City, or anywhere in Southern Utah I’d be happy to visit you in your home at your convenience. If you live elsewhere in Utah or Colorado you can call or email me at the contacts listed below.

Trevor Carlson

President/Reverse Mortgage Specialist

Heritage Reverse Mortgage

(435) 359-9000

Heritage NMLS# 1497455, Trevor’s NMLS# 267962

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