Going Beyond HECMs Requires Imagination We Must Reframe Retirement Discussions By Scott Norman IT’S EXPENSIVE TO grow old in America. In our lifetime, regardless of cost-of-living adjustments or policy changes out of Washington, it will undoubtedly continue to become more expensive for many Americans to afford to retire. To make matters worse, the U.S. population is aging at such a rate that, within a few years, older Americans will outnumber the country’s children for the first time. Rising costs of health and nursing care, as well as other living costs, will only make the retirement years, for some, the most heartbreaking and unclear years of their lives. It doesn’t need to be that way. As we look beyond Home Equity Conversion Mortgages (HECMs) to the future of retirement in America, I can envision a time when lenders originate 250,000 reverse mortgages a year. However, before that comes to fruition, we as an industry need to harness all the imagination, persistence and education we can if we are going to expand the overall discussion. Retirement plans must shift from managing account balances to helping individuals think about when they plan to retire and howmuch income they will need in retirement. A paradigm shift must occur, moving away from a myopic focus on wealth accumulation to the more important longterm goal of generating and protecting lifetime income. There is an assumption of predictability around retirement that is doing great harm, as we all know retirement is anything but predictable. Yet, in the U.S., workers are being asked to take responsibility for their financial well-being in retirement now more than ever—without being asked to consider how long they will live in retirement. Social Security and employer- provided pensions used to be the foundation for building a secure retirement. That system has been weakening for decades as traditional pension plans have been replaced by a system of savings, like a 401(k), which was meant to supplement and not replace traditional pensions. Most employers today offer defined contribution plans to their workers as the primary—and often sole—retirement program. While all of this is great, it is indeed missing the bigger picture. Our goal in the reverse industry should not be to sell one more loan next month—it should be about changing how people think about funding and living in retirement. The challenge is that most people don’t believe retirement will be overly challenging or erratic. We need to reframe that discussion. Changing Americans’ awareness around what retirement really looks like and requires is, in fact, a necessary prologue to any discussion about getting more borrowers to embrace non-traditional financial tools. We as an industry need to educate consumers about how the universe has shifted, so they can be aware of the changes to life. I don’t want to see Americans just endure in retirement, but truly enjoy retirement. The new retirement will be not only about expanding our reverse mortgage product lines, but also expanding borrowers’ imaginations of what their older years will really require. Board Room Scott Norman 6 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
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