Americans seem to have this idealistic view of debt.
Debt is OK when you need it. But when it’s time to retire, you should be debt-free for the most part, right?
Not so fast.
We recently documented how an increasing number of seniors & people approaching retirement age have to make smart decisions about their money. And that means looking at different options when it comes to debt.
The Traditional View
The New York Times recently related a story of a dentist who hated the idea of being in debt, even a mortgage loan.
“I just don’t like owing people money,” the dentist said.
Early on in his career, his plan was to have his debt paid off before retirement, including his mortgage.
But as he approached his 50s and had accrued debt from his business and other areas, his plans began to change.
Plus, his financial advisor advised him NOT to focus on paying off his mortgage.
How would you advise a client like this?
The New View
These days, clients want a more holistic approach in their view of retirement. This takes into account their age, savings levels, home equity as well as their personal situation as it relates to family members and living arrangements.
Also, changes in tax laws have made mortgage debt less advantageous especially for people in middle to lower income brackets which is often where retirees find themselves when they stop working.
Instead of trying to pay off their home to ensure nothing happens to it, more seniors are opting for a reverse mortgage for that sense of security & flexibility.
Like paying off your mortgage, a reverse mortgage means an end to monthly mortgage payments. This creates some relief in obligations and makes it easier to live without having to make a mortgage payment.
Additionally, a reverse mortgage provides an income source as seniors get the equity from their home in the form of cash which can be used for anything they see fit.
And, the reverse mortgage does not have to be repaid until the borrower no longer resides in the home as their primary residence.
Let Us Help
If you’d like to find out more about how a reverse mortgage might change the retirement options for a client or loved one, please get in touch with us today!