Modern retirement problems require modern solutions - Skip to content

Modern retirement problems require modern solutions


Society is still clinging to a retirement model that no longer exists

The renowned comedian Chapelle coined the phrase “Modern problems require modern solutions”, in the first episode of the season of his self-named show. This classic comedic line brings to mind the challenges older Americans face today. Modern problems such as only 21% of retirees having a company pension and a quarter of Americans have no retirement savings at all.

Due to a lack of retirement savings, high interest rates, and stubborn inflation, the wheels have fallen off the proverbial retirement wagon. But all hope isn’t lost for those fortunate enough to own their home in which they may have substantial equity. A CBS’s MoneyWatch column entitled, “Here’s when a reverse mortgage makes sense, experts say” points to four situations when getting a reverse mortgage may be the right choice.

The first is when retirees find themselves lacking the funds to live comfortably in their non-working years. Even those who diligently saved and invested over decades under the guidance of a financial planner could end up coming up short thanks to inflation.

Generally, financial professionals plan for an annual inflation rate of 2.5% However, inflation above this threshold places increasing stress on a retiree’s ability to maintain sustainable withdrawals throughout retirement. Many who believed their savings would be sufficient will keep their homes hoping to pass them on to their children. However, sustained inflation or an unforeseen financial shock can wreak havoc on the best-laid plans. Future stock market losses can further constrain future cash flow when coupled with the increased cost of living.

The second example when a reverse mortgage may make sense is when a retiree is considering taking out a loan to offset upcoming or current expenses. With both HELOCs and personal loans requiring monthly payments a reverse mortgage can provide access to cash without the burden of payments. Reverse mortgages stand alone as the only loan that doesn’t require the borrower to make principal and interest payments each month.

The third factor that could make a reverse mortgage ideal is when a homeowner has substantial equity. According to NRMLA’s RiskSpan Reverse Mortgage Market Index, homeowners 62 and older had $12.84 trillion in equity. However, many homeowners overlook that home equity is neither real nor tangible until it’s separated from the home either by a sale or taking a loan. Just because it’s there today doesn’t mean it will be there tomorrow.


“Consumers with few assets to leave to their heirs may want to avoid a reverse mortgage. Their heirs may be left with little to no equity and very few options to keep the property”, says Michelle White, mortgage expert at The CE Shop. While this may be true, most older homeowners don’t want to be a financial burden on their children. And if their children are unable or unwilling to assist what’s the homeowner’s Plan B?


The fourth situation when a reverse mortgage may be suitable is when a retiree wants to postpone tapping into their retirement savings or delay Social Security benefits.

While such strategies may reduce taxes and boost future Social Security payments retirees should seek the advice of a qualified financial professional who can help them weigh the costs, benefits, and risks of postponing Social Security.

In conclusion, older Americans are facing modern problems. These problems require modern solutions not rooted in the retirement trends of yesteryear but based on the brave new world older Americans face today. Yes, modern problems require modern solutions and a reverse mortgage could be just that for many.



Editor in Chief:
As a prominent commentator and Editor in Chief at, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
Readers wishing to submit stories or interview requests can reach our team at:

Leave a Comment

1 Comment

  1. “Social Security payments retirees should seek the advice of a qualified financial professional who can help them weigh the costs, benefits, and risks of postponing Social Security.” Sage advice.

    Upon coming into the industry the concept of delaying the start of SSBs (Social Security benefits) by taking distributions from a HECM line of credit seemed like a natural. Now after almost 2 decades of seeing the risks involved and the time it would take for the cash flow to catch up to the SSB payout structure beginning at age 62, it is hard to understand in what situations to advise doing it. While selling the strategy might bring another loan in the door of the originator, will it help the senior and when will it begin to pay off? If still practicing as an active CPA, I would never recommend the strategy.
    So while from a conceptual point of view the idea seems flawless, from a risk point of view, it is hard to justify this strategy. Try running a theoretical payoff strategy of when loan would be paid off by using the funds received after the start date on two scenarios and see based on the risk of death for whom it might make sense.

Add a Comment

Your email address will not be published. Required fields are marked *


Recent Stories


Subscribe to join our World

Get the latest reverse mortgage news delivered straight to your inbox.