The Domino Effect

Who Suffers When Seniors Reduce Spending?

The American economy depends on a viable senior population.  When the economic turmoil on older households causes the seniors to reduce spending  —  we are all affected.

Until the current economic downturn, the mature market had over $1.6 trillion in spending power and a net worth that’s nearly twice the U.S. average. The recession hit most people, but none harder than seniors.

A new AARP survey, of people age 45 and older, found that 79 percent of those with a 401(k), IRA, mutual fund, or individual stocks and bonds have lost money. Of employed seniors, about 57 percent of those who lost money last year plan to delay retirement and work longer as result of their investment losses, and 26 percent say they have already postponed plans to retire, according to AARP.

Because of the recession, according to the New York Times, seniors are cutting back on critical purchases such as utilities, food, gas, mortgages, travel, entertainment, non-essentials and prescription drugs. 

SENIORS’ FEARS OF PAST HARDSHIPS

Seniors’ fears of past hardships influence how they react to the current economic recession. According to Sheryl Garrett, CFP®, author of Personal Finance Workbook For Dummies®, “Some seniors may be running short on money but, for others, there’s always that fear of running out because they lived through the Depression. They know how ugly it can get.”

RAMIFICATIONS ARE FAR-REACHING

But who is actually affected?  The ramifications of seniors “cutting back” are far-reaching – from the health of our economy to the health of our seniors.  Of the active retirees, travel and leisure is a major expense; travel money is now being spent on utilities.  Money that could have helped the younger generations now goes to paying the mortgage.  Older seniors spend more on health care.  However, research shows us that today nearly one third of patients were forced to cut back on their medications due to out-of-pocket costs.

SENIORS CAN LEAD THE US ECONOMY OUT OF THE RECESSION

Reverse Mortgages may be the most viable source of additional cash flow for seniors.  And, may in fact, be the most expedient source of funds.  Most Reverse Mortgage funds are available in less than six weeks from the date of application.  Subsequently, putting more money in the hands of seniors will lead to more spending on a local level, strengthening communities across America.

TRICKLE UP ECONOMICS

Reverse Mortgages can play a role in stabilizing the economy from the ground up by infusing much needed currency into a beleaguered economy.  Reverse Mortgages will help the senior thereby bolstering local and national economies.

Who Suffers When Seniors Reduce Spending?

WE ALL DO.

Let’s put money back into the hands of seniors.

Seniors Held Hostage by Love

If you’re like me, a baby-boomer and young senior with aging parents (in my case aging in-laws) who live five hundred miles away, you understand the importance of the tough decisions we face as a family.

Mom (84 years young) treasures her independence but 10 years of care giving for Dad (92 years old) with slowly progressing Alzheimer’s is visibly taking a toll on her.   As they move through their “Golden Years” in their home of 40 years, they have outlived all but a few of their “younger” friends.   With fewer social contacts around them, Mom is becoming more isolated and now grapples with the logistics of increasingly frequent doctor appointments, new and changing medications, her own hearing loss, and (not surprisingly) depression.   She still shops, cooks, pays the bills, cleans the house, schedules needed repairs, all while lovingly caring for her husband of sixty years who can no longer provide her with the conversation or companionship she so desperately needs.

We all know that the time is rapidly approaching for the impending “big move”.   Over the past decade we have gently lobbied for them to move closer to us; a stressful endeavor at any age but daunting in your 80’s or 90’s, particularly in an uncertain economic climate.   Mom does not want to live with us.   She does not want to impose but more importantly, wants to live in “her own home” determined to care for Dad forever.   However, home prices are significantly more expensive in our city.   Relocating to buy a home here was not a financial possibility for them one month ago but now everything has changed!

As of January 1^st, 2009 HUD and the FHA has developed a program that helps senior homeowners 62 and older, use a Reverse Mortgage to pay for a portion of the purchase price of a home.   This Reverse Mortgage for Purchase will enable Mom and Dad to buy a home here for significantly less out of their pocket.   The Reverse Mortgage portion of the purchase will grow as a negatively amortizing loan with Mom and Dad retaining ownership and making no payments as long as one of them lives in the home.   Mom, who is fiercely independent, is now excited about the prospect of relocating to their new home, continuing her care for Dad, and knowing she will have the loving support of her family nearby.   Thanks to the FHA Reverse Mortgage for Purchase we can now “be there” when they need us.

Seniors, who feel trapped or reluctant to move because of the expense, owe it to themselves to find out about a Reverse Mortgage for Purchase.   It can put some “gold” back into your golden years.

Check out our Web Sites:   Deb Guiffre, MD, CSA &    Jann Fitzgerald, CSA

A BRIDGE to Tomorrow

What Every Senior Homeowner Needs To Know

Bridge to Future Financial Peace of Mind

With pension plans losing 25 to 50% within the last two months, most retirees are in a panic.  Our retirement funds are slipping at a rate never seen in our lifetimes. Financial and Estate Planners are finding Reverse Mortgages to be an excellent tool in today’s challenging economic environment.

The skeptical financial planner of yesterday now realizes a Reverse Mortgage bridges the gap until client portfolios can recover. Financial Planners see Reverse Mortgages taking on an entirely new role in maintaining senior assets.  The savvy financial planner is now incorporating the use of the Reverse Mortgage to minimize the further depletion of pension assets while providing adequate monthly cash flow for the client.

As one financial planner recently stated, “My clients are apprehensive about the uncertainty of the market stability and have great concerns about maintaining their monthly cash flow.  I’ve recently advised several clients to use a Reverse Mortgage to supplement their monthly income.”  Another, recommends using a Reverse Mortgage for Purchase as her client downsizes.  Each of these financial planners understands the value of a Reverse Mortgage in helping clients weather this difficult financial climate.

A LIFELINE for Retirees

If retirees with portfolios are affected by the economic downturn, those without a portfolio are struck even harder. The impact to these seniors can be devastating. Loses in the Dow indirectly affect these retirees whose income is from savings and Social Security.  Those on a fixed income suffer because of rising taxes, rising inflation, and greater expenses.  Their home becomes the only asset available to help them through these turbulent times.  A Reverse Mortgage becomes a LIFELINE.  It bridges the gap for these retirees by providing additional years of financial independence.

Evidence shows us that a Reverse Mortgage is often recommended by professionals whose clients require stability and cash flow.  In our experience we have found that seniors are able to leverage a Reverse Mortgage so that it meets their financial and family needs.

Whether recommended by a financial advisor, family member, or trusted friend, one thing is certain: the financial peace of mind that accompanies a Reverse Mortgage is priceless.

Local Woman Eaten By Reverse Mortgage

Why is it so easy to read a headline that shows reverse mortgages in a negative light? I think it is because we often believe our brother-in-law when he tells us that they are dangerous and we need to be ever vigilant, lest we become their next victim. Perpetuation of this urban myth is a detriment to the senior homeowner.

Seniors are losing trillions of dollars from the stock market, their pensions, and their home values. The financial market today differs greatly from just one year ago. Today seniors are caught between a rock and a hard place. They cannot sell their homes because of the current state of the real estate market and they don’t have the needed income to qualify for a loan.

A Reverse Mortgage may offer their only hope because it is a source of income the senior can obtain without income or credit requirements.

So what will it take for the millions of seniors who are quickly approaching that slippery financial slope to realize that a reverse mortgage may be their lifeline? Would it make a difference if we told them about the new advantages and safe guards that are now in place?

• Origination fee is capped
• FHA limit is raised to $417,000 nationwide
• No Cross-selling of financial products
• Only HUD/FHA approved lenders can offer Reverse Mortgages

So what is the answer?
A good start would be to stop the urban myths before any more seniors are hurt. Next, we could replace the myths with the FACTS and the benefits our seniors have received from getting a Reverse Mortgage. Then lastly, we could try to convince them that their brother-in-law actually knows nothing about reverse mortgages.