March-April 2021

someone might not need to be 62 to get a reverse mort- gage, the variables change but might help people achieve their goals at an earlier age. Loan officers might not be clear on how all the components of retirement are inter- twined but would benefit if they learned as much as possi- ble, Vernon and others say. “I’m an advocate of assessing all your assets as to how they might finance a retirement and obviously home equity is one of those,” Vernon says. “Once you look at your home equity, you have a choice of either selling and downsizing and realizing a gain that you then invest. Or, if you really love your home and you’re going to stay in it for many years, then consider taking out a reverse mortgage. If you really need extra income, you could consider renting out a room or two, which can address loneliness, a serious retirement risk. Home equity is just one more piece of the puzzle to help you decide when you retire and what your standard of living will be.” Like Munnell, Vernon thinks that skepticism lin- gers about HECMs. But, knowing that most Americans have not saved enough in an IRA or 401(k), he sees the value, and loan officers are positioned to help people either to understand their options or to point them in the right direction. “There are some people thinking that reverse mort- gages are a magic thing that’s going to save their retire- ment. Maybe, maybe not,” Vernon says. “Let’s get it so that the loan officers would act more as consultants.” The bottom line: People must build various safety nets beyond Social Security. “If you’re in your 60s entering retirement, and you’re going to live another 20 or 25 years, you need a Plan B and a Plan C,” Vernon summarizes. “And so, I’d hope that people would be aware of the var- ious uses of reverse mortgages. Maybe it’s something that you don’t take out now but in five years.” He relates that he has retired friends who started researching reverse mortgages after they had a finan- cial emergency. “I’m betting that they didn’t really do enough homework because their backs were against a wall, so they had to make Plan B on the spot,” Vernon says. “I’d rather have people know about reverse mort- gages and, if that is their Plan B, they are at least edu- cated about it.” Another mistake is that retirees often don’t think about where they want to live until years into retirement, when it might be too late to move. “That current home that they live in may not be the best place to retire, especially if the house is isolated in the suburbs,” he says. Communities that have housing close together, but with varied age demographics, might become more Tapping Retirement continued from page 19 Tapping Retirement continued on page 22 “For many households in the middle of the income distribution, their house is their largest non-Social Security asset. And it’s got to be brought into the game.” —Alicia Munnell, director, Center for Retirement Research, Boston College Today’s decisions create Tomorrow’s reliable relationships It’s Time to Make Your Move! The Reverse Loan Origination System Powered By reverse express Baydocs@baydocs.net (888) 297-3627 20 REVERSE MORTGAGE / MARCH-APR I L 2021