Too Much Life Left At The End Of The Money

Monday I had lunch with a Morgan Stanley wealth adviser. He is a charming conversationalist with a gift of giving animated accounts of issues he encounters.

Among the many things we discussed was the fact that, for the first time in his 27 years in the field, he has started having the following financial discussion with young couple:

  • Save for your kids’ college education
  • Save for retirement
  • Save to support your parents, not if – but when – they run out of money

Gone, according to him, are the days we could expect an inheritance from our parents. Rather, most of us will watch our parents live to deplete their own savings, and will have to step in to financially support them in their last years. I myself, as one immersed in financing for seniors, certainly see this trend playing out.

It was like reading a contrived movie script when I got back to my Middleburg Bank office after lunch and read the following Wall Street Journal headline: “Counting on an Inheritance? Count Again.” The subtitle read, “The bad news: Many baby boomers are likely to get less money from Mom and Dad than they thought. The worse news: They may have to help their parents financially instead.”

For many Americans, too much life left at the end of the money is a reality. According to the WSJ article:

…a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively. All of this has made the 85-and-over age bracket the fastest-growing segment of the population. In an era of low interest rates, volatile financial markets, and rising costs for health and long-term care, finding money to cover those years isn’t always easy.

From the side of the desk I sit on, I would change this last sentence to read, “…finding money to cover those years can be nearly impossible.”

However, that picture can change dramatically if proceeds from an FHA-insured reverse mortgage (FHA HECM) are added to the equation. In fact, the Journal article goes on to say:

…there are several steps families should consider, financial planners say. Among them: Have parents recalibrate their budgets, downsize to a smaller residence, buy an annuity or longevity insurance to lock in a lifelong income, or take out a reverse mortgage.

I have often said the FHA HECM is as close to a miracle product as you are ever going to see in the world of finance. It’s not a fit for everyone, but for many, not only is it a good option, it is an excellent option. It lifts the burden on the upcoming generation, and allows seniors to live out their final years in the dignity and comfort of their own home.

A separate product, the FHA HECM for Purchase, is a purchase loan available for the senior who needs to relocate into a home better suited to aging in place.

Call any time. I always enjoy hearing from you – and I love walking you through your reverse mortgage questions. Talk to you soon.


Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · ·

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