Recently I attended an event at which the featured speaker, an attorney based in the Washington, D.C. area, led off with, “I hate reverse mortgages – I HATE them.”
Well, I’ll say this: if you’re an attorney, there’s nothing like a forceful opening statement.
As a reverse mortgage specialist who has been in the field several years, I am always interested in hearing what people have to say about reverse mortgages. So, after the event I asked the attorney what he hates about reverse mortgages. I thought he was going recite the same-ol’, same-ol’ outdated information, personal bias, and general peevishness toward the product. But I was wrong.
Here was his answer:
He said his firm sees reverse mortgages after a senior’s family has completely spent down savings, burned through assets, and utterly depleted the reverse mortgage. Then they turn to him for help.
I have to say, I have seen the same thing – an unplanned, undirected spend-down of assets which leaves the senior with no money and few options. Needless to say, this can result in a less-than-optimal outcome. And I hate it too.
In fact, I’ve given this approach to handling finances a name. I call it “Play My Guy.”
“Play My Guy” Approach to Financial Planning
I married young, and we started our family before I even graduated college. Consequently, I was still in my twenties when my girls were old enough to start playing video games, and I’ll admit it – I like video games. But as my girls got older and games got more sophisticated, I didn’t keep up my game skills. So every once in a while I’d be walking through the room where my kids were playing with friends, and would hear, “Hey, Mom, play my guy.”
Play your guy? Play your guy? I can’t play your guy – I don’t even know what this game is called.
A couple other things here.
I don’t know the rules to the game – I’ve never played this game. But let’s say I grab the manual and speed-read the rules. I still don’t have any experience. I’m going to get slaughtered. Preservation of self-esteem dictates you don’t just jump into something you’ve never done…even if it’s in the company of a bunch of 13-year-olds.
In much of life common sense prevents us from jumping headlong into certain activities. And yet, many adult children of aging parents plunge right into handling their parents’ finances and legal matters. The parents say the equivalent of, “Here, play my guy,” and one of the adult kids says, “Sure, I’ll play your guy. I can do this.”
Let’s say for argument’s sake the adult kids put in hundreds of hours on the internet and learn all about wills, trusts, estates, Medicare, eldercare, long-term care. Let’s pretend they’ve really learned all the rules. They still don’t have any experience. They’re going to get slaughtered – and it’s not going to be a roomful of 13-year-old girls laughing at them. In fact, no one’s going to be laughing.
So what this attorney was saying was that he hates mopping up after a slaughter. He hates being called into a situation in which there are few – if any – good options left. However, this same attorney conceded he recommends reverse mortgages when they’re used in strategic retirement planning.
A reverse mortgage is a powerful financial tool when used as part of a comprehensive, long-term retirement plan. It can mean the difference between financial sustainability and a less-than-desirable fallback position.
But just like with many things in life, rarely are deferred planning, poor management, and a piecemeal approach ingredients for a good outcome.
Give me a call or shoot me an email regarding your experiences with finances in an aging population. I always love hearing from you.
Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem
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