I'm sure you've all seen commercials like this one:
Reverse Mortgages. I love how good old Fred Thompson pronounces it, that southern drawl making it sound so damn good and wholesome. Or maybe it sounds like he's a little drunk. Anyway, these commercials from many different financial companies run on television all the time, roping in seniors with money problems, I guess.
I don't remember these kinds of commercials when I was younger. I don't remember companies gearing this financial product towards the WWII generation in their retirement. I remember my grandparents owning their homes outright. Homes that they lived in since having children after the war. Homes they will die in, leaving a little wealth behind to pass on to their children.
In theory, a reverse mortgage sounds great. If you own your home, why not tap into the equity and enjoy your retirement with money you earned? It's your money - if you have to pay someone a little off the top to access it right now, why not? You get to live a little better, and someone makes a little money helping you do so. Fair is fair.
But ah, we are talking about the Baby Boomer generation here. What is the first reason they list for doing a reverse mortage? "Eliminate monthly mortgage payments." I've even seen recent commercials where it is further clarified as "Reduce or eliminate monthly mortgage payments." After a little research, I've found that this is the number one reason retirees are tapping into their home equity through a reverse mortgage.
This product is geared towards people who don't fully own their home. Let's face it, if people are responsible enough with their money to pay off their home before retirement, they likely have no need for a reverse mortgage. The people targeted with this government insured product might own enough of it to pay off their existing mortgage, with nothing else left over after paying all the fees and the interest to the reverse mortgage agency. With the addition of "reducing mortgage payments" in recent commercials, it would appear that many people don't have enough equity in their homes to pay off the balance.
These are people either nearing or already into retirement. 62 and older. And they don't own their homes yet.
These commercials boast, "And you still own your home!" No you don't! You never did! The bank owns your home. And now AAG owns your home. In fact, you've never owned your own home. You kept refinancing it, or trading up, or tapping into a home equity line of credit. It's what caused the housing boom and bust! No one actually owned their homes, and used someone else's money to buy and sell and buy and sell. Or they used their home like an ATM machine to go buy things they didn't need, artificially inflating the economy with artificially created dollars drawn out of an artificially inflated home price.
So now, in their twilight years, having saved nothing, Baby Boomers are turning to the one thing they were kinda sorta able to pay down, gaining that equity after paying quite a high premium in mortgage interest. They're tapping into the only thing that's left to eliminate their current debts at best, reduce current debts at worst.
They. Are. Broke.
The Boomers are going to suck this society dry of every last drop. If they are doing it now, at 62 years of age, to themselves - to their own homes, and their own money they have somehow managed to save and not fritter away - what do you think they will be willing to do to their children and grandchildren? (Fact is, they already have done it to their children and grandchildren though the National Debt.) The Boomers are just now beginning to retire, and already they need to tap into their home equity to just make ends meet?
These people are the most irresponsible, reckless, selfish, narcissistic generation to ever grace this planet with their presence. They had everything given to them, and they squandered it. Not only were they terrible stewards of their inheritance from the WWII generation - everything from moral values to the economy to the nation's infrastructure, all of which are crumbling - they obviously have also been terrible stewards of their own wealth that they created.
Know this, and really ponder its implications: when the Boomers are gone, there will be nothing left. If you are still lucky to have a WWII generation grandparent still living, when they die, and pass on their inheritance to their Baby Boomer children, know that you will see none of it. The Boomers will spend it all. They're going to take it all. There will be no inheritance from the Boomers. Nothing.
But, hey! It's a safe and effective financial tool! Yeah, a tool to screw your children and grandchildren out of any inheritance. What you've done to the country, you are now doing directly to your own families. Bravo, Baby Boomers!
I can't wait to see what else they've got in store for us.