Reminding Seniors of Their Options
“Destiny is not a matter of chance; but a matter of choice. It is not a thing to be waited for, it is a thing to be achieved.” That’s how former US Secretary of State William Jennings Bryan characterized life. His words are akin to the more concise dictum, “carpe diem!”
Yet many seniors are reluctant to seize the day, as they perceive reverse mortgage with the psychological equivalent of “deer in the headlights” panic. They imagine themselves painted into a metaphorical corner, paralyzed at the thought of losing either their beloved home or their life savings. As we discussed in the post on Scare Tactics, neither of these is a realistic outcome for the vast majority of seniors. So how do you put their minds at ease?
To begin, outline your client’s options. For example: should they take Social Security at age 62 or 65, or delay as long as possible to realize greater gains? According to the Financial Literacy Research Consortium at Boston College, delaying benefits until age 69 for a single male or age 70 for a woman or two-earner couple results in significant savings in their later years. The same boon may also apply to IRAs. Although seniors are required to begin receiving distributions by age 70½, this still affords them many years in which to postpone payouts and build their nest egg.
By the same token, a couple might want to consider whether to downsize to a smaller, less expensive home rather than apply for a reverse mortgage on their existing one. While their long-term homestead doubtless holds many memories — and most seniors prefer to age in place rather than relocate — a lower monthly mortgage will conserve resources. And research now indicates reverse mortgage may be the new “sweet spot” for borrowers: using accumulated home equity as an alternative to drawing down on investments.
Regardless of which path your prospects choose, the ultimate goal is for them to recognize that they have a choice: their later life destiny is in their own hands and is not a future to be feared, but seized with gusto. Then they’ll have the opportunity to enjoy truly “golden years”.