Retirement Wizardry: Where the Smart Money Meets Reverse Mortgage Magic

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As 10,000 baby boomers a day turn 65 (a phenomenon that began in 2011 and continues through 2029), retirement savings — or the lack thereof — continues to be grist for financial columnists nationwide. And while writers tout the importance of scrupulous saving — this chart shows the median net worth of a householder aged 65-69 to be just under $200,000 — what these actuarial tables fail to take into account is the noteworthy John Lennon lyric: “Life is what happens to you while you’re busy making other plans.”

Someone still shy of retirement age may have had every intention of going grandly into a well-cushioned old age, saving and investing diligently — and been wiped out by a health crisis not covered by insurance, an economic downturn, or an act of nature (e.g., fire, flood, tornado).

You probably know at least one person who fits this profile, if not half a dozen. They’ve saved sincerely, and life intervened. With Social Security becoming benefit negative by 2020, and more seniors being urged to wait until age 70 to apply for it, the need for the reverse mortgage option is growing.

Yet many older Americans are still reluctant to tap their home equity. Lack of understanding typically underpins such reticence. Granted, the HECM is complex. But many older adults may need to take a step back initially, to assess what aging in place means, whether they are best suited to doing so, and how to begin readying their lives and home for the next life stage.

The rest of this post directly addresses your prospects. You are welcome to post it on your own reverse mortgage website or blog, or use the material in emails and presentations, to help open the reverse mortgage conversation.

Aging in Place with Aplomb

For people who are healthy and want to remain in their own homes as they grow older, a reverse mortgage can help make this a reality. The first step is determining whether aging in place is in your best interest.

Here are 7 guidelines a homeowner can use to decide whether they want to age in place, and if so, whether to explore a reverse mortgage. Aging in place can serve you well if:

  1. You have sufficient equity in your home to qualify for a reverse mortgage, also known as a HECM (Home Equity Conversion Mortgage);
  2. Your health is generally good, and you’re mobile;
  3. You have a network of local family, friends, and neighbors you can rely on;
  4. You drive — or public transportation is readily accessible;
  5. You live in a safe neighborhood;
  6. Your home can be modified to address changing needs;
  7. You’re outgoing, well connected, and able to reach out for social support.

A House That Adapts to Your Needs

Home modification is important, even — especially — if you’re healthy and active now. Our bodies and needs change over time. Someone who is spry in their 60s, 70s, and even 80s may be glad their house “ages with them” as they grow older.

A few simple home modifications can make a big difference. These features, elements of what’s known as “universal design,” can affordably retrofit your home for greater safety and peace of mind:

  • Grab bars, especially in the shower and bathtub;
  • Handrails. People can slip at any age and take a tumble; as we age, this can result in a broken hip or worse;
  • Ramps. They can also be installed temporarily if someone needs to use a wheelchair for a short time, such as when recovering from surgery;
  • Door widening to accommodate wheelchairs, walkers, and four-pronged canes;
  • Low thresholds to avoid tripping, and to make it easier to navigate with assistive devices (walkers, canes, etc.);
  • Kitchen and bathroom modifications to make cabinets easier to reach, floors less slippery.

Your Purse-onal PERS 

You may be familiar with personal emergency response systems (PERS), which are usually sold as a pendant, bracelet, or watch you can wear to summon help in an emergency. Now there’s a PERS equivalent for your finances.

SilverBills, a startup founded by an attorney and CPA whose mission is to help people age with dignity and security, makes it easy to pay bills accurately and on time. The digital service deducts payments from your existing bank account or from an escrow account that SilverBills establishes for you with an FDIC-insured bank; they do not have access to your bank account. You also have a dedicated, specially trained customer support representative — a skilled “business assistant” to help ensure you’re protected from financial fraud.

Do You Believe In Magic?

Fans of the Harry Potter books may not realize that Hogwarts’ headmaster, Albus Dumbledore, also knew something about smart retirement planning. (That’s what happens when you live to be 150.)

For those of us with somewhat shorter potential lifespans, Dumbledore says, “It is our choices that show what we truly are, far more than our abilities.” Even saving $25 a week at 5-percent compound daily interest will grow to $41,302 in 20 years’ time, a nice adjunct to your HECM loan.

Take heart (and inspiration) from an extraordinary 18-year-old, who saved $85,000 working part-time jobs since age eight — while going to school and volunteering at a retirement home, where she started a Cyber-Seniors program to help residents learn technology.

So save what you can, be smart about managing your finances, and keep your wand handy. With equity in your home and positive aging in place profile, the HECM option can transform money concerns into real retirement magic.

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