It's easy to keep our thoughts focused on the things closest to us. For perspective, it's important from time to time to look a little further. After all, how we see and interpret things are often a reflection of what we know and our experiences.
Pensions are a great example. When we look at pensions most of us get the 'warm and fuzzies.' It's a guaranteed source of income, it's there always, it can pay all of my bills I know I have to pay. We all love certainty, and because of that, we all love pensions! Yet when we look more closely at pensions, for example, with studies from Pew, we start to see that pensions are only guaranteed as long as the funds backing the pension remain solvent. IE: if the pension runs out of money - uh oh! I bring up Pew for a reason. If you're not familiar Pew runs a series of studies on municipalities and pensions that is nothing short of EYE OPENING. The information can be disconcerting, full disclosure.
Want a more specific example? Take a look at social security which is likely the largest pension you'll ever be a part of. After all, you did pay into it (in all likelihood) for at least 40 quarters. You did support it with taxes if you were an employer, self employed or even an employee. Social security is called an entitlement, but what is it really? It's a pension! You'll get an income for life, you know what it's supposed to be at various ages, and it may go up as there are adjustments, or, COLAs (cost of living adjustments).
But what happens to you if and when Social Security is no longer solvent? What happens if Social Security runs out of money? It's certainly possible as an egregious amount of money has been borrowed from the SS fund. If you've gotten a statement it's even said RIGHT ON THE FIRST PAGE that benefits are expected to be reduced! Most of us simply don't think of this as a real risk. Why not? Since it's a PENSION and we usually don't have too much perspective here.
Let's talk about something besides pensions. Let's talk about the reverse mortgage. Have a yucky taste in your mouth? Maybe you've had a reaction, a physical and visceral one. I've seen people go from friendly to completely turned off when they learn I am hyper specialized in the HECM (what you know as the reverse mortgage). But why? PSSST, I have a secret. We all know why. I'm going to whisper it to you. BECAUSE THE REVERSE MORTGAGE HAS A REPUTATION!
At least it does in the US. Did you know that there are a large number of countries around the world that have their own version of the reverse mortgage? It shouldn't be too much of a surprise, a number of them have their own version of social security as well. In fact, a lot of them have 'reciprocity' with social security where you can be eligible for US social security or a foreign governments pension (oh, yes, they actually call theirs pensions a lot of times) depending on where you've lived and worked vs retired.
So what is the perception of the reverse mortgage in other countries? Well in Australia, it's wildly popular. Canada, even more so. Is it in Europe, you bet! Asia? Yep, also there. In some of these countries it's even called what it really is: a home pension. I wonder why it would be more popular in these countries that call it a pension? Maybe it's because the term pension gives people the 'warm and fuzzies.' After all we all love certainty!
Here's my point. Pensions aren't unilaterally good and risk free. They have their warts. Reverse mortgages aren't all warts, they have their good and they reduce risk. Maybe it's time to get some perspective!
