May/June 2022 Reverse Mortgage Magazine

Munnell further notes that not everyone was able to save during the crisis. Women, particularly women with children, continue to be among those most hurt over the past two years. Many women’s careers were interrupted because they were more likely to stay home and care for school-age children, as well as older parents. More research needs to be done to determine how 401(k)s and other retirement plans were impacted and whether people can get back on track with retirement plans now that most schools have reopened, she adds. Long term, she and others say, equity release products should remain an option for people to make ends meet in retirement. Equity Release Products Factor In “Individuals tapping their equity in retirement is a very desirable goal,” Munnell says, adding that reverse mortgages still have a long way to go before they gain widespread acceptance. “I was a great fan of reverse mortgages. At one point, I invested in a reverse mortgage company, but it seems like they are complicated and hard to sell.” Regardless, equity release options should be a part of a retirement plan, she says. For example, the Center for Retirement Research has been working on a pilot program that would improve the ability of older people to defer property taxes that would have to be paid back with interest only after the owner dies or sells. Such a program is being debated in Massachusetts, where Munnell says she hopes it eventually will gain widespread approval and expand to other states. “People need to think about home equity as part of their retirement portfolio,” Munnell says. “The question is just how do you get at it. I am just a little discouraged by the cumbersomeness of the reverse mortgage, although the goal really is the right goal.” Social Security For most retirees, Social Security will remain a cornerstone of their retirement plans, which is something that once again was proven during the pandemic, according to a September 2021 report from the Center for Retirement Research. “The pandemic has underscored the importance of Social Security as a critical and reliable source of support for retirees and those with disabilities,” the report says. However, Munnell, who authored the report, says the necessary fixes to the popular program have not advanced. By 2034, significant across-theboard cuts to benefits—up to 25 percent according to Social Security estimates—would need to be implemented if fixes aren’t signed into law, Munnell says. Social Security is Munnell’s core area of expertise— “Social Security is my baby”—and she says that bipartisan support is needed. “It would be nice to not get up right to the precipice, so that people who rely on this program don’t have to worry,” she says. “But it just seems like with all the excitement that is going on in the world it just hasn’t risen on the priority list. We need to make sure that public confidence in the program is maintained.” While people can start collecting Social Security at 62, the monthly amount increases dramatically if they wait until the full retirement age, which is 67 for anyone who turns 62 this year or later. The monthly payment amount continues to increase for people who wait until 70. How and when to collect Social Security is a calculation that each person must make. For example, anyone facing a health issue might want to collect sooner rather than later, experts suggest. For some people, the pandemic prompted them to retire early and use reverse mortgages to bridge Social Security gaps, several experts also say. “This is, for sure, a trend that we are seeing, especially given the power of the reverse to allow senior clients to delay Social Security and/or simply facilitate funds from their HECM line of credit,” says Loren Riddick, CRMP, national director of reverse lending for Thrive Mortgage in Alcoa, TN. “There is no doubt that folks are utilizing this amazing program in ways previously untapped.” Riddick points out that a reverse mortgage is an important tool for people, even if they have saved a lot. “Remember the wise old saying: ‘It is always better to have it and not need it, than need it and not have it.’ Nothing is truer when one considers the power of setting that line of credit in motion as a compliment to one’s retirement strategy,” he adds. “The logic is simply undeniable.” Saving Increases continued on page 27 REVERSE MORTGAGE / MAY- JUNE 2022 25

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