Anxiety Sells

retirement anxiety


Like it or not, the reality is that fear and anxiety sell. To put a point on it, fear motivates us to take proactive steps to reduce risks with a reasonable solution where we would typically run to comfort instead. As it’s said, ‘action defers anxiety’.

Here are just a few motivating fears and the actions many have taken.

Fear: A young income-earner worries his family would suffer financially should he die prematurely.

Action: They purchase a life insurance policy.

Fear: A conservative investor worries that today’s low interest-earning CDs and money market accounts won’t allow them to keep up with inflation.
Action: They purchase an investment/contract that guarantees a higher interest rate.

Fear: A senior widow is anxious that medical expenses outside of Medicare will break the bank.
Action: She purchases a Medicare Supplement policy to reduce her financial exposure.

Fear: The U.S. Debt just added $2 trillion to the federal ledger making federal debt exceed our annual gross domestic product (GDP) for the first time since World War II. Higher taxes are likely to follow.
Action: They convert their existing IRAs to Roth IRAs to stop future tax liabilities.

Fear: Inflation is likely to increase substantially in the wake of the COVID-19 pandemic making nearly everything more expensive.
Action: They get a reverse mortgage which eliminates their existing mortgage payments and leaves them an available line of credit should they need to increase their cash flow even more.

Ethically we never want to sell only from a position of fear. However, we should ask the uncomfortable ‘what if’ questions to uncover a homeowner’s hidden fears. Those things they wouldn’t volunteer to discuss yet eat away at their peace of mind. After all is it better to shy away from sensitive topics for our own comfort or check to see if the homeowner could benefit by taking some proactive steps to leverage their home’s value?

Now more than ever before older homeowners would benefit by thinking through the realistic ‘what if scenarios’ that most retirees wrestle are struggling with. So, let’s commit to getting a little uncomfortable ourselves and address the proverbial elephant in the room.

retirement anxiety 

 

It’s Time to Hedge Against Inflation

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Using a Standby Reverse as an Inflation Hedge

reverse mortgage newsAfter several years of artificially low interest rates the Federal Reserve is beginning to raise interest rates – incrementally albeit. With home values still modestly appreciating across the country and interest rates beginning to rise, is now the window of opportunity for homeowners to hedge against inflation?

The Fed may tighten the money supply as fears of inflation begin to rise. In the wake of the Great Recession, many feared that prices for good would fall. However, that fear may be put to rest and replaced with another – inflation. A recent CNBC article states that a .6% jump in the Consumer Price Index (CPI) in January, pushed the annual inflation rate to a five-year high of 2.5 percent.

Rising prices will put more pressure on older homeowners on a fixed income as the cost of goods and services increase. Rising interest rates will increase the cost of borrowing and also reduce the cash benefit that reverse mortgage borrowers can obtain. In this uncertain economic landscape some homeowners could benefit by leveraging a HECM line of credit as a hedge against inflation, states a recent article in the Wall Street Journal. Older homeowners may want to revisit the ‘wait and see’ approach to getting a reverse mortgage, and rather choose to secure the loan at a younger age.

Download the video transcript here.