This You Can Count On: Things Fall Apart

Laurie Denker MacNaughton

Here’s a phrase I haven’t thought about in years: critical system redundancy.

I’ve been aware of the term – along with other phrases like “gyroscopic effect” and “linear actuator” – since I was about three years old, the consequence of having a rocket scientist for a father. The reason I haven’t thought about the term for a very long time is that it just doesn’t come up that often in the world of Reverse Mortgage lending.

But when speaking with a friend today “critical system redundancy” came to mind, and despite the uncommon nature of the term itself, the concept is very common.

In a nutshell, here’s the idea: if you have something essential to operations, you’d better make darn sure there’s a backup. This is equally true when talking about the ruler of a sovereign nation, Pampers in the diaper bag, a spare tire in the trunk…or retirement finances.

Over the years I’ve met couples who didn’t save enough for retirement. But I’ve never met anyone who purposely didn’t save enough. And only rarely have I met someone who burned through retirement savings in foolish spending.

Rather, this is what I see: homeowners who have reached the age experts call “advanced elderly.” Many of these homeowners once had extensive savings, but simply have outlived their reserves.

I see homeowners whose adverse health event consumed savings, or whose late spouse suffered a condition that left the survivor with substantial debt.

I meet individuals who were laid off at age 60, aging parents raising grandchildren, retired women newly divorced, couples in need of home healthcare.

But I also meet the planners – the couples who know things fall apart, issues will eventually arise, that days of evil may come upon us as a thief in the night, as the Psalmist says.

These are homeowners who originate a reverse mortgage before a need arises, and who hold their reverse mortgage in reserve in order to take full advantage of the growth rate collecting in their line of credit.

A reverse mortgage is a tool, not a miracle. There is still going to have to be self-discipline. Retirees are still going to have to practice economy. That’s just the way it is for most of us. But that’s a far cry from lying awake nights worrying whether there is going to be money enough to last the month.

As I’ve said many times, in retirement no one is going to get by on just their Social Security. No one is going to make it on their 401-K. Few are going to survive on their pension, their annuity, their IRA, their bank account – or their reverse mortgage. But when added together, all these combine to create a long-term means of maintaining financial independence in retirement.

In fact, you can think of a reverse mortgage as critical system redundancy for retirement finances.

If you would like to explore how an FHA-insured reverse mortgage might help with your retirement plans or those of your loved ones, give me a call. I always love hearing from you.

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