A profound paradox

Laurie MacNaughton [506562] © 2016

I don’t usually spend much time reading statistics on aging. Truth is, I don’t really feel the need: I see retirement-related issues every day.

But recently I spent 10 days touring Ireland, and in a sort of by-the-by fashion the tour guide mentioned Ireland has an astounding 8% growth rate, easily the highest in Europe. Everywhere I looked I saw signs of young life: strollers, bikes, schools, sports fields.

We were in a remote area where I couldn’t google numbers for the U.S., but the comment wildly piqued my interest.

So how fast, according to the U.S. Census Bureau, is our population growing? In 2016, a projected .77%. That’s not a big increase.

Some other data points: by 2040 Americans 65 and older will represent a tad under 25% of the population. In that same timeframe, the number of Americans aged 85 and older will triple. Triple. That is a big increase.

Herein lies a profound paradox: dramatically improved longevity, widely recognized as one of mankind’s greatest triumphs, may well prove one of its greatest challenges.

For most workers, pensions are a luxury of previous generations. Social Security, already strained, is going to need big overhauls if it’s going to be there for upcoming retirees. Savings and investment dollars are going to have to last longer – much longer.

But many homeowners are also going to need to look to other assets as part of their retirement funding.

And this is where reverse mortgage can play a role.

A reverse mortgage is fundamentally a home equity line of credit. The difference between the credit lines we’re more acquainted with and a reverse mortgage line of credit is that there is no monthly repayment requirement with a reverse mortgage line of credit.

Instead, when the last person on title permanently leaves the home, the loan is repaid. The remaining equity goes to the homeowner, heirs or estate.

Reverse mortgages are not a fit for everyone – no one financial product is.

But a reverse mortgage is going to play an important role in many homeowners’ financial health in retirement, particularly when used as part of a sound, long-term retirement plan.

If you would like to explore how an FHA-insured reverse mortgage might help with your retirement plans, give me a call. I always love hearing from you.