A Solution to the "Number One Problem..."
A Solution to the “Number One Obstacle to Retirement”
by
Amy Catling, C.S.A.
President, Seacoast Family Mortgage/Seacost Reverse Mortgage
Reprinted with permission from The Senior Times
Recently, U.S. News and World Report published an article entitled “The Number One Obstacle to Retirement”. According to the article, what was the Number One Obstacle? Non-mortgage debt. In a recent study commissioned by Scottrade, for 63 percent of Americans, debt was an impediment to retirement savings in 2009. And 61 percent of Americans expect their debt to limit retirement savings in 2010.
From the article: “Non-mortgage debt creates a triple-whammy when it comes to retirement. First, during your working years you have less to save toward retirement because you must make payments on your debt. Second, unlike a mortgage payment that goes toward a home that over the long term goes up in value, consumer debt usually goes to pay for things that have no lasting monetary value. And third, in retirement you need more income because, in addition to your regular monthly expenses, you must keep making payments on the non-mortgage debt you've racked up. As a result, many save less during their working years and need more during retirement.”
Because the money coming in during the working years that may have gone towards paying down the mortgage is tied up in payments on consumer debt, more retirees than ever before are still making a monthly mortgage payment at the time in their lives that they can least afford it. According to the Federal Reserve, more than 32 percent of households headed by someone aged 65 to 74 had a mortgage on their primary residence in 2004, up from less than 19 percent in 1992.
In the U.S. News & World Report article, solutions are offered: make saving a priority during the working years, don’t borrow more, scale down your budget, plan for the expected and unexpected. Sound, solid advice. But there is at least one more answer for those who are over 62 – an FHA-insured reverse mortgage.
A considerable number of our clients at Seacoast Reverse Mortgage initially investigate reverse mortgages with the primary purpose of retiring their mortgage debt and permanently eliminating their largest monthly payment. If you include those who do the same due to home equity lines of credit and loans, and consumer debt on credit cards, you’d be getting close to a majority of our clients. For many of these people, simply getting rid of the monthly mortgage payment is all they need to rebound financially and they never use their reverse mortgage line of credit again. Of course, it’s always available if they need it for an unexpected home repair or emergency.
If you or someone you care about is over 62 years of age, owns their own home, and would benefit from the elimination of a monthly payment, please contact Seacoast Reverse Mortgage in
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