Tag: Reverse for Purchase

So…Is the Sun Setting on Reverse Mortgage? Mortgage Reform and What it Means for Seniors

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage

The last call I took last night and the first call I took this morning were basically this: What do upcoming changes to the reverse mortgage program mean for senior homeowners?

First, let me hasten to say no one yet knows exactly what the changes will look like – but, we do have a general idea. Following is a rundown on proposed changes and a brief explanation as to why Congress deems changes necessary.

Change: Financial Assessment

What: It has always been required that homeowners pay their homeowners insurance and property taxes, and maintain routine upkeep on their home. With the proposed changes, lenders will be required to perform a financial assessment to determine if potential borrowers can meet these obligations.

Why: Only a minority of reverse mortgages get into trouble. But, on the ones that do, tax and insurance defaults are the number one reason.

Change: Limits on Initial Draws

What: An initial draw is the amount the homeowner requests when the loan closes. Currently, the upfront draw can be up to the full amount homeowners qualify for, as determined by their age, the value of the home, and the prevailing interest rate. Changes will likely limit the amount homeowners can take upfront.

Why: The assumption is that limiting the upfront draw will help with long-term financial planning.

Change: Inclusion of Younger Spouse

What: Currently, only homeowners aged 62 and older can be on a reverse mortgage loan. Under the proposed changes, both spouses would be on the loan, even if one is under the age of 62.

Why: This change would give the younger spouse more options regarding staying in the home if the older spouse passes away.

Both Congress and the largest senior advocacy groups remain highly supportive of the FHA-insured reverse mortgage program. Additionally, Congress has specifically said it views reverse mortgage as an important component of long-term financial planning for the retirement years.

Proposed changes appear to be well thought-out, and designed to safeguard the long-term availability of reverse mortgages.

Give me a call with your questions or concerns. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 · Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

NORC? What the Heck is a “NORC”?

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage
Laurie Denker MacNaughton [NMLS# 506562]

I don’t know why, but certain words just sound funny: “chubby,” “flop,” “kerfuffle,” “spork.” Ok, so I concede spork may be marginal in its usage.

Add to this funny-sounding list “NORC,” a term I hear with increasing frequency.

NORC is an acronym, and stands for “naturally occurring retirement community.” And chances are high this funny-sounding term is going to become an increasingly important part of each of our vocabularies.

So what the heck is a NORC?

A naturally occurring retirement community – NORC – is a neighborhood that was not actually built as a retirement community. Through the years, as residents have remained in their homes, the community has aged and now is home to an older population. NORCs harken back to the hometown, shtetl, village, or tribe that dominated most of human history, where the needs of the individual were accepted as the responsibility of the community.

To see an example of a NORC many need look no farther than their parents’ community. I myself am just back from visiting my widowed mother in Tucson. In her small neighborhood of a couple dozen homes, only a handful has changed ownership since I was a child. All the other homes still have names I know well on the mailboxes, and the neighborhood which once was home to growing families is now home to a close-knit community of retirees.

Some NORCs affiliate with the national Village to Village Network, known as the “The Village Movement.”  These neighborhoods embrace a volunteer-driven approach in providing services to help senior neighbors remain independent as long as possible in the community they love. Villages are membership-driven, and members receive services provided by neighborhood volunteers. Among services typically provided are educational and cultural programs both within and outside the immediate community, transportation to shopping and medical appointments, and help with minor household repairs.

Not all NORCs are officially organized and affiliated, however, and some NORCs evolve over time as needs of the neighborhood continue to change.

Overwhelmingly, most homeowners desire to continue living in their own home, so the NORC model likely will become more important in the years to come. Economics also play in its favor, as a high density population of seniors makes delivery of services more efficient.

Reverse mortgage fits well into the NORC model, as it can make available monies to fund Americans’ ever-increasing longevity. Reverse mortgage is a home equity loan repaid when the last homeowner permanently leaves the home. After the loan is repaid, all remaining home equity goes to the senior, or to the heirs or estate. Reverse mortgage will never be the full solution to financial needs in retirement, but when used as part of a comprehensive financial plan, it can be an important piece of retirement funding.

As the American population ages, seniors’ skills and experience increasingly are viewed as a valuable community asset. And one way of preserving this asset is supporting strategies for successful aging in place – including the model with the funny-sounding name of NORC.

Give me a call and let’s chat – I always love hearing your stories.

Laurie

Laurie MacNaughton [NMLS# 506562] ∙ Reverse Mortgage Consultant, President’s Club ∙ Middleburg Mortgage, a Division of Middleburg Bank ∙ 20937 Ashburn Road ∙ Ashburn, VA 20147 ∙ 703-477-1183 Direct ∙ LMacNaughton@MiddleburgBank.com ∙ www.MiddleburgReverse.com

Visit me on the Web at: middleburgreverselady.com

The Upside of Working Longer

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story

One of my favorite National Public Radio programs is called Freakonomics: The Hidden Side of Everything. Well, for those still working well into the traditional retirement years, there could be an unexpected upside: a study out this past Monday shows seniors who continue working significantly reduce their risk of developing dementia.

At the Alzheimer’s Association International Conference in Boston, a lead scientist with the French government’s health agency presented findings from nearly a half million French workers, whose average age was 74.

The unusually large study showed that for each year a person worked past the traditional retirement age, the risk of developing dementia dropped by over 3 percent. Translated into hard numbers, a person retiring at age 65 was 15% less likely to show signs of cognitive decline than was someone retiring at 60.

To control for the possibility that an onset of memory decline prompted retirement, the study ran two sets of numbers. One set calculated how many subjects developed dementia within five years following retirement, and a second set of numbers analyzed how many developed dementia within ten years following retirement.

The trend line remained constant, implicating retirement as the cause of decline rather than mental decline as the cause of retirement.

Though the French study was based upon an unusually large data set, years’ worth of research has shown that maintaining social interaction, and remaining physically and mentally engaged are vitally important to lowering the risk of mental decline. Remaining in the workforce may be an effective way of accomplishing all three recommended activities.

Give me a call or drop me a line – I always love hearing your thoughts.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com  www.middleburgmortgage.com/lauriem
Licensed in: Maryland (MD), Washington, DC, Virginia (VA), Pennsylvania (PA), Delaware (DE), North Carolina (NC), South Carolina (SC), Georgia (GA), Tennessee (TN).

Hop on the “Aging in Place” Bandwagon

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story
By Jacqueline D. Byrd , Esq.
Used By Permission

He who every morning plans the transaction of the day and follows out that plan, carries a thread that will guide him through the maze of the most busy life. But where no plan is laid, where the disposal of time is surrendered merely to the chance of incidence, chaos will soon reign. — Victor Hugo, French poet and novelist (1802-1885)

The aging in place concept and planning for aging in place is a bandwagon that all seniors should hop on quickly. Just about 100 percent of older adults, if they could have their choice, would choose to grow old and die in their own home.

These days, we are faced with sequestration that looks like it has no end. As government help grows more and more scarce, we need to work together to find other sources of help and to make aging in place the most practical and affordable way to care for a growing population of older Americans.

Aging in place means remaining in one’s home safely, independently and comfortably, regardless of age, income or ability level. It is a concept that is exciting for many reasons, not the least of which is that it can mean the pleasure of living in a familiar environment throughout our lifetime.

The Aging in Place Council, www.ageinplace.org, provides links to organizations collaborating on accomplishment of aging in place goals. The National Association of Home Builders offers courses and certification for aging in place building specialists. This program teaches the technical, business management and customer service skills essential for completing home modifications for the aging in place concept. Sometimes seniors can remain in their own homes with just a few simple modifications such as barrier-free bathrooms, wider halls, grab bars and better lighting. These can be less expensive over the years than an assisted living apartment. A web-based directory, www.nahb.org, lists Certified Aging in Place Specialists who have been trained in the unique needs of the older adult population.

Another industry important to the aging in place concept is the reverse mortgage industry. These programs are largely controlled by the government, and loan applicants must meet with an independent FHA-approved housing counselor to be certain that they understand the reverse mortgage program.

Briefly, a reverse mortgage is a financial tool designed to help you remain in your home and retain full ownership. It allows you to convert the money you have built up as home equity into income that you can use however you choose. Unlike a traditional mortgage, there is no repayment until you permanently leave your home. There are no income or credit requirements to qualify, and because the funds are considered to be a loan rather than income, they are tax free and do not affect regular Social Security or Medicare benefits.

To take advantage of this program, you must be age 62 or older and the home must be your primary residence. If you have a deep desire to leave your home to your children or other heirs, it’s important to discuss the possibility of that with the reverse mortgage people. Sometimes a reverse mortgage and the wish to leave your home to your heirs do not go together well. Make sure you understand that issue completely before signing on the dotted line.

Those who sell long-term care insurance find the aging in place idea a perfect complement to their business. The idea of staying at home comfortably is a consumer hot button, says Nancy Morith, president of N.P. Morith Inc. in New Jersey. “People really want to stay on their own turf. They have created their own nest and want to continue to surround it with family and friends.” Most long-term care policies sold today include care at home options.

Geriatric Care Managers, www.caremanager.org, provide extremely important and helpful resources when seniors wish to stay at home. When care is needed, a professional care manager, often a nurse, will make informed judgments to stretch the senior’s funds. They help you decide such questions as whether you need a full-time or part-time aide, or what equipment or home modifications you may need. To find a care manager in this area, you can check with the Mid-Atlantic Association of Geriatric Care Managers, www.gcmonline.org.

In the rapidly growing senior housing industry, aging in place is a term used in marketing by Continuing Care Retirement Communities. These residences do offer the chance to age in place, but they prefer you first move independently to their community to begin aging. They have independent living, assisted living and perhaps Alzheimer’s care and skilled nursing in one location. In most CCRCs, you must also move from one wing of the campus to another to receive the increased services.

To age in place successfully requires planning. We must think carefully about how to accommodate the physical, mental and psychological changes that often accompany aging and provide for those changes in our own homes. Some communities get together with interested volunteers and work out aging in place in their own neighborhoods. Maybe this could somehow work for Bowie. Please email, call or write if you have ideas.

Thank you for reading. Stay well. See you next week.

The writer, a longtime resident of Bowie, is secretary of the Maryland/D.C. chapter of the National Academy of Elder Law Attorneys and a member of the Elder Law Section of the Maryland State Bar Association. You may email her at seniormoments@byrdandbyrd.com.

© 2013 CapitalGazette.com

Planners who Plan, Fixes that Fix – and Real Solutions for Real Life

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage

Solutions Looking for a Problem

I stood at the paper towel machine waving my hands like a feeble magician trying to conjure paper towels when the thought occurred to me: I frankly can’t remember the last time I heard someone complain about pulling a paper towel from a dispenser. Self-dispensing paper towels solve a problem that was never a problem.

This got me to thinking: how many other fixes fix problems that aren’t problems? And if you can believe it, I actually came up with several – but that’s a different commentary altogether. It’s the corollary that hit home.

Finite choices

Remember functions? Those funky f(x) equations in math class? Basically, a function is a set of inputs and their corresponding outputs. Put another way, a function says if I do this, I get that – one solution for each problem. There is a finite list of outcomes.

Fortunately, most day-to-day issues are not direct functions, and multiple solutions exist for many of life’s problems. But often, the farther one travels into retirement the more limited the solution set becomes. Options become limited and outcome becomes a direct function of input.

Larger solution sets

In what I consider one of the most encouraging transformations in the history of the reverse mortgage product, I am seeing a regular stream of clients referred from the financial planning community. Seniors seeking informed input are turning to an informed source, namely their financial professional. Of course, I’ll never know how many financial professionals steer their senior clients away from reverse mortgage – but I do know an increasing number tell me they view reverse mortgage as a legitimate financial tool when used in concert with a comprehensive financial plan.

Financial professionals refer clients well before catastrophe strikes, before clients’ means have dwindled, before financial limits are reached – before the financial boat plunges over the cliff of desperation. Planners understand multiple inputs equal a bigger solution set.

Real solutions for real life

I hear the same stories everyone else in the financial industry hears: seniors unable to return to full-time employment. A spouse lost, and the resulting 50% drop in income. A catastrophic event – or a chronic condition that became financially catastrophic. Or, simply, too much life left at the end of the money.

Unlike the motion-detecting paper towel dispenser, reverse mortgage is a real solution to a real problem.  When put in place preemptively, before it’s just a crisis management tool, reverse mortgage can be part of a sound retirement plan that maintains independence as long as possible and slows burn-through on other retirement instruments.

If you are – or someone you know is – looking for ways to increase financial options, give me a call. I always love hearing from you.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 · Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

The New Version of Old

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage

In preparation for writing this I queried friends on who came to mind when I said “old.”

Four of the five answers? “Granny.”

Being, as my husband says, a “pop-culture illiterate,” I had absolutely no idea about anything relating to the topic, so I googled “Granny.” Wanna guess how old Granny was?

60. As in S-I-X-T-Y. And we’re talking a show that first aired in 1962 – not 1862.

New Version of “Old”

Like everyone else, I know 60-year-olds who are running marathons, starting new businesses, attending their daughter’s high school graduation, and looking forward to at least another quarter century of life, a significant portion of which they plan to spend in retirement.

However – however…

This new version of retirement comes with a price – literally. And just what is that price?

According to Ray Ferrara, head of ProVise Management Group in Clearwater, Fla., as quoted in Forbes.com, that price is about $2.69 million (http://alturl.com/ejre6).

Why so much?

In the first decade of retirement, retirees tend to travel more, make more long-anticipated home improvements, entertain more, and dine out more than they did before retirement.

When you add increased medical costs and a life expectancy of 90, the new version of retirement ain’t cheap.

In fact, by some estimates, over the course of the next three decades seniors can reasonably expect their cost of living to triple.

So what to do?

1)     Have a plan: work with a qualified financial planner who specializes in retirement planning.

2)     Stick to the plan: a plan is only as good as its implementation.

3)     Look into ways to reduce unnecessary spending: most of us have expenditures that deliver appallingly little bang for the buck.

4)     Consider a reverse mortgage.

Remember, reverse mortgage was never intended to be a replacement for a sound financial retirement plan. However, it can play an important role in augmenting what is already in place, and slow the burn-through rate on other retirement instruments.

If you are, or someone you know is, looking into reverse mortgage, give me a call. I always love hearing from you.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

 

 

The Scarlett O’Hara Approach, or Hope Is NOT A Strategy

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage

A friend of mine has a crystal ball sitting on his desk, and taped to its base is a sign that reads, “Temporarily Out Of Service.”

Too bad – because right about now most of us could really use a crystal ball.

Most financial professionals agree that planning for our future is as much art as it is science, and that determining how much money we’ll need to get us through the golden years is akin to trying to predict the future.

This said, however, there is general consensus on what doesn’t work.

The Scarlett O’Hara Approach, or Hope Is NOT A Strategy

Scarlett O’Hara might have been very surprised to learn her approach to bad news – “Tomorrow is another day” – has a name. Optimism bias, also known as unrealistic optimism, is a common trait that causes people to believe they are at low risk of experiencing a negative event. Adolescence is heavily associated with optimism bias, a bias that frequently leads to an increase in risky behaviors. In the medical realm, optimism bias causes individuals to put off measures that contribute to good health.

And for many, optimism bias causes us to believe financial matters will get better on their own as we head into retirement.

Rick Gow, wealth management advisor with Lara, Shull, and May in Falls Church, Virginia, says, “A measure of pessimism is not bad when you’re planning for retirement. You can’t just ‘hope’ you’re going to have enough to get you through the most expensive years of life. A plan is of paramount importance.”

With life expectancies now extending into the 90’s, most of us are eventually going to draw upon every savings “bucket” we have available. And that’s where the FHA Reverse Mortgage comes in.

Reverse Mortgage was never intended to be a replacement for a sound financial retirement plan. However, it can play an important role in augmenting what is already in place, and slow the burn-through rate on investments and other retirement instruments.

If you, or someone you know, would like to look into the potential benefits of a reverse mortgage, give me a call. I always love hearing from you.

Laurie

Laurie Denker 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 · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

So What is the “Fiscal Cliff,” Anyway?

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Retirement Planning, Reverse Mortgage

You’re wondering what the Fiscal Cliff is all about? Here are the main issues:

In 2013, tax cuts for individuals will expire, along with long-standing tax breaks for businesses. Taxes for President Obama’s health care law will kick in, as will spending cuts enacted by Congress as part of the debt-ceiling deal. Long-term jobless benefits will also expire.

So What?

Here’s what: The Congressional Budget Office (CBO) estimates that if all these items occur, an estimated $600 billion will disappear from the U.S. economy in 2013, and push the country into a double-dip recession. Given that Europe is officially in a recession for the second time in four years, if our leaders don’t act now our economy is going to fall headlong over the same cliff.

And keep your head on a swivel regarding inflation. While the latest Producer Price Index and Consumer Price Index reports show inflation remained tame at the wholesale and consumer levels in October, inflation can quickly get out of hand.

What does this mean for home loan rates?

Inflation is the arch enemy of mortgage rates. However, home loan rates should continue to benefit from the uncertainty in Europe. This is because investors will likely continue to see our bond market – including mortgage bonds – as a safe haven for their money. But inflation is a very real threat to home loan rates: if inflation hits, look for mortgage rates to go up.

The bottom line is this:

Home loan rates remain near historic lows, making now the best time ever to talk with the seniors in your life about extinguishing their “forward” mortgage with a HECM Refinance. Also, there has never been a better time to use a HECM for Purchase to get into a home appropriate for aging in place. It’s hard to say how much longer rates will stay this low.

Call me with questions you or your clients might have – I always love hearing from you.

Laurie

Laurie Denker 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 · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Reversing Years’ Worth of Skepticism

by middleburgreverselady, posted in FHA HECM, Retirement Planning, Reverse Mortgage

Even if they don’t adhere to it, most people have at least heard of the “bucket” strategy of saving for retirement. Basically, it’s a method of asset allocation, a way to diversify investments and save for the day you’re no longer working full time.

But here’s a question you might not know the answer to: for most people, what is the biggest – and best funded – bucket?  Cash equivalents? Fixed-income securities? Pension?

Answer: No, no, and no. For most people, the single biggest “investment bucket” is their home.

You can think about it this way: you might have designated several buckets. But if you didn’t put sufficient money into them during the working years, those buckets are not going to get you through retirement. However, most Americans paid into their home, even during the past few years when times were tough.

But here’s the problem: after spending years pouring the first fruits of one’s income into the home, that money is frozen, tied up in an illiquid asset. It’s an investment, certainly. But it’s not one easily converted into an income stream for retirement.

Increasingly, however, drawing upon that bucket by means of an FHA reverse mortgage is being recommended as a way to meet seniors’ financial needs during retirement.

FHA reverse mortgages have been around since 1988. But until recently, the financial planning community viewed them as the dirty underbelly of financial products.  It was the rare financial planner who saw any legitimate use for them whatsoever, let alone who used them in a strategic way.

However, within the past few years scores of scholarly studies have shown both the near-term and long-term positive impact of reverse on standard of living, financial portfolios, and estates.

In “How Important Is Asset Allocation To Financial Security in Retirement?” authors Munnell, Orlova, and Webb with Center for Retirement Research at Boston College state:

…[F]inancial advice…tends to focus on financial assets, applying tools that give prominence to the asset allocation decision. But most people have little financial wealth, and financial tools are often silent on the levers that will have a much larger effect on retirement security for the majority of Americans. These levers include delaying retirement, tapping housing equity through a reverse mortgage, and controlling spending [emphasis added].

Of particular interest to many financial planners is that, when set up as a monthly payment option, a reverse mortgage basically annuitizes the home – and it’s a considerably bigger annuity than most people would have been able to establish in the years they were supporting their family, helping with college tuitions…and paying their mortgage.

Rick Gow, wealth manager with the independent investment firm Lara, Shull, and May in Falls Church, Virginia, cites the example of a 66-year-old with a house valued at $400,000.

After subtracting closing costs, the retiree could receive a tax-free, monthly check of $1,252 for as long as the home remains the primary residence. By the time the homeowner turns 85, disbursements would total more than $289,100; by age 95, the total payouts would be over $435,600.

If the homeowner were to take a onetime, lump sum payout, he or she would receive approximately $256,800.  A third option would set aside that amount in a line of credit, the balance of which grows over time, tax free.

There is also a newer, reduced fee FHA reverse mortgage, called the HECM Saver. The over-all payout is less with this option, but Gow points out the lower closing costs make it a good option for some.

The majority of Americans fear running out of money in retirement more than they fear death, according to a May, 2012 AARP bulletin. In an America where 10,000 boomers a day turn 62, the FHA reverse mortgage has an increasingly pivotal role to play in retirement planning.

I always love hearing from you. Call me at any time with questions.

Laurie

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 · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Babies Don’t Have Dumb Ideas

by middleburgreverselady, posted in Caring for Aging Parents; A Daughter's Story

When my daughters were teenagers I often said the biggest difference between teens and babies is that babies don’t have dumb ideas yet.

But both teens and babies have this in common: just a couple years later, both are more capable, more independent, and better able to care for themselves.

It’s tough to acknowledge, but I now have to add my mother to the comparison.

My mother is probably the most gifted person I know: brilliant, beautiful, funny, well read, extensively traveled, graceful and poised.

But she is getting old, and her proficiency in daily tasks is falling away at a relentless pace. And, unlike either babies or teens, a couple more years is not going to make the issue any better.

NPR Morning Edition’s Jessica Smith, in “Baby Boomer Money Squeeze Worsens, Multi-Gen Households Rise” (June 6, 2012), writes,

Roughly 78 million baby boomers are moving into their retirement years now. At first, they will be the “young” old. Legions of retired boomers soon will be walking around the mall, volunteering with community groups and taking grandchildren on trips.

At first, that can be good for the economy. But this immense generation, born between 1946 and 1964, will keep aging. Based on current medical outcomes, most of the people who live beyond age 85 will end up with dementia or other disabilities that require costly care.

Here’s how fast the numbers will ratchet up: In 1990, only about 3 million Americans were over the age of 85. Today, the figure is 6 million. By 2050, the United States will be home to about 19 million people older than 85, according to U.S. Census projections.(http://www.npr.org/2012/06/05/154001412/baby-boom-money-squeeze-is-set-to-get-tighter)

Almost 20 percent of advanced elderly Americans now live with their aging adult children, putting tremendous pressure on “leading edge” boomers who are hitting traditional retirement age. Boomers tended to have fewer children, later in life, which in some cases has resulted in their still having dependents at home at a time previous generations would have been saving intensively for retirement. Additionally, many middle-aged parents find themselves helping grown children who have lost jobs, homes, and businesses – the classic “sandwich generation” squeeze, made more intense by a prolonged recession.

We are a becoming a nation of the old and the older, the squeezed and the very squeezed.

Writes Ms. Smith, “For individuals, families, local government officials and federal taxpayers, this demographic shift will drain dollars and attention, and force extremely difficult decisions about living arrangements, as well as end-of-life care.”

When we have these talks about taxes and government, what kind of numbers are we talking about?  The primary number to watch is the national debt: in 1970, when boomers were young, the national debt ran about 28 percent of gross domestic product. It now stands at 70 percent.

And, as in the case of my mother, a couple more years is not going to make this issue any better.

According to Centers for Medicare and Medicaid Services, Medicare will remain solvent until 2024. Starting last year, Social Security already began paying out more than it takes in.

As former U.S. Comptroller General David Walker, a federal spending expert says, “Government has grown too big, promised too much and waited too long to restructure. It is going to spend less over time … which means that individuals will have to plan, save and invest for the future.”

Plan, save, invest…and take out a reverse mortgage, according to research put out by Boston College in May, 2012.

….but more in my next piece about several watershed reverse mortgage articles published this spring by major research institutions.

Laurie

         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 · LMacNaughton@MiddleburgBank.com www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/