There was a time when only those who had just passed through the portals of desperation would consider a reverse mortgage. I will admit there are those who still subscribe to this outdated way of thinking. But today, more and more seniors are thinking out of the box and are beginning to see reverse mortgages as a very versatile investment and retirement income strategy.
Let me share the strategies of three out of the box thinking seniors:
The first is a gentleman in his late 60’s. For almost thirty years, he ran a small, but successful, custom home construction firm. A few years ago, he made a personal decision never to retire. It was okay to become very selective on what he built and for whom he built it. It was also okay to take winters off, but retire – NEVER!
That plan worked fine until the collapse of the building market in 1998. After some soul searching and with the advice of his CPA and attorney, he declared an open ended vacation from construction. He will return, but not until stability returns.
Again, with the encouragement of his CPA, he and his wife secured a reverse mortgage. The monthly, tax free income from their reverse mortgage, along with their Social Security income, provides more than enough income to cover their fixed monthly expenses.
That was two years ago and, since then; they have been to Mexico twice and spent last summer at their vacation home in Northern California. He’s taken a couple of small remodel jobs but mostly to keep active and his skills honed. And, yes, he plans to resume building the minute he believes he can do so profitability and he tells me that some of his old customers are starting to think seriously about a new home.
When he gets going again, he tells me that he will repay some or maybe all of the money he pulled from their equity. However, he also tells me that he will repay only when his CPA tells him he needs to take the mortgage interest deduction. So, our client’s recession survival planning strategy will become his tax planning strategy when the good times return. Pretty smart, don’t you think?
Here is another client’s reverse mortgage strategy that you may find compelling.
Many financial authorities are telling us that these are good times to invest wisely.
There are opportunities all around us be it gold, real estate, or carefully researched stocks.
This client has been an active and quite successful equity investor for many years. Make no mistake, I do not endorse or recommend this strategy for anyone who is not an accomplished investor and one who fully understands the risk associated with all but the most conservative investments. However, this client loves the freedom to tap into a small portion of his home equity to use for securities trading purposes, without the requirement to repay for as long as he remains in his home. He calls his reverse mortgage line of credit his highly flexible margin account.
Each time I tell my clients about this gentleman or write about him in one of my articles, I once again remind all that I do not endorse this strategy nor would I recommend it to others, but it does speak to the many uses of a reverse mortgage.
The third out of the box reverse mortgage client is an 80 year old grandmother. I frequently tell her story at my reverse mortgage classes. This great lady was not content to see her legacy or her modest estate pass to her family upon her death. She wanted to pass not only her worldly possessions; she wanted to pass her values, her family experiences and traditions, along with the wisdom that comes from a rich full life. So, her reverse mortgage has provided the income to travel to her ancestral homeland accompanied by her children and grandchildren.
Her reverse mortgage gives her the ability to spend quality time with her family to share stories and family traditions as she passes on her legacy. Her legacy runs far deeper and will eventually mean far more to her grandchildren than her modest “wealth” that was previously trapped in the bricks and mortar of her home. Money is not the most important thing we leave behind. The most important gift we leave to those we love is our values, our traditions, and our wisdom.
So, I don’t think that this great lady would have much patience with those who wish to wait for a lifeline when they become desperate. She would tell her cohorts to start focusing now on what’s truly important in life. She would tell them not to wait until they pass from this life to share whatever monetary wealth they have accumulated. Do it now. By giving now, seniors are able to “package” their money with their values, wisdom, and advice.
She believes that those virtues will remain in the hearts of those they love long after the money has been spent.
I must say, I agree, but I’d like to hear from you.
