The potential benefits of reverse mortgages for seniors have been a topic of discussion in the financial industry. Chris Mayer, CEO of Longbridge Financial, believes that reverse mortgages can help seniors deploy their financial assets and make a positive impact in their later life.
One common reason why seniors hesitate to get reverse mortgages is that they prefer to keep their wealth and pass it on as a bequest asset to their heirs. However, Mayer argues that using the wealth while alive can be more rewarding than waiting for a legal will to take effect after death. By resolving the loan of a reverse mortgage, seniors can transfer ownership and utilize their home equity to support worthy causes. Mayer shares the example of his grandparents, who were able to donate to their alma mater and sponsor lectures while they were still alive. By participating in these activities, they could share the experience with their grandkids and make a direct impact.
Mayer emphasizes the value of doing something meaningful while still alive and helping the next generation. Instead of providing a bequest in their fifties, he suggests using the wealth to assist children and grandchildren in purchasing a home when they are younger. This can alleviate debt and help them start their lives without financial burden. Mayer believes that the ability to help a grandchild leave college without debt and allowing them to thank their benefactor directly is a rewarding experience.
The current state of retirement in the United States is another factor that led Mayer to take a leading role in the reverse mortgage industry. Many seniors enter retirement with mortgage debt, which can be a significant burden, especially for those on fixed incomes. Mayer points out that more than 50% of people in their sixties still have mortgage payments. Carrying a forward mortgage payment into retirement can leave seniors burdened by housing expenses, with nearly a third of retirees spending over half of their income on housing.
Mayer suggests that exchanging a forward mortgage for a reverse mortgage can eliminate the burden of mortgage payments and free up cash flow for other necessary expenses in retirement. Studies have shown that seniors who no longer have mortgage payments spend more money on pharmaceuticals and have more financial resources to allocate. Given that many seniors’ wealth is tied up in their homes, using a reverse mortgage can provide a way to assist family members and support other endeavors that matter to them.
In conclusion, reverse mortgages can offer seniors an opportunity to deploy their financial assets and make a positive impact in their later life. By utilizing home equity, seniors can support worthy causes, assist family members, and alleviate financial burdens. Mayer’s advocacy for reverse mortgages highlights the potential benefits for seniors in the larger retirement ecosystem.