Friday, January 3, 2014

Reverse Mortgages Says Much About Baby Boomer Generation

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.

28 comments:

  1. If you really want to irritate boomers, mention to them that our entire system of welfare-debt spending is based upon "growth," most notably the growth of the population that must pay for such spending... as in, it is easier for 2 million people to pay off a Billion dollar debt than it is for 1 million... thus, even though we've long had an expanding debt, each new generation was larger than the previous one, making such debts somewhat reasonable to repay.

    Of course, when the Baby Boomers came of age, they were the first generation in history to legalize abortion - as a means of birth control - and they genocided the subsequent generations with it, dropping our birth rates from a healthy 3.9 per couple in 1970 to a below replacement 1.5 per couple today. All this was done so the Boomers could "have it all" and party in orgies that would shame Babylon. In the USA, over fifty million babies have been aborted... and a large portion of those babies would be adults by now who would also have had babies. In other words, there are probably about 75-100 million home-grown, natural born Americans that are missing from the US population... all of whom COULD have helped to pay for the vast social safety network the Boomers voted for themselves. But, they are dead refuse in the bottom of a pail in a hospital instead, contributing nothing but fertilizer for future plant life.

    Now, the Boomers are saying the younger generations are too stupid and useless to pay for the Boomers self-voted entitlements... I mean, wow! Just wow! The Nazis are complaining the Jews aren't paying their fair share to their military pensions because too many were burned in the ovens, stupid Jews!

    I suggested once that it would be ironic and fitting if the Boomers, the first generation to push for widespread abortion, would also be the first generation to experience forced euthanasia, because the subsequent generations will have no way to pay for the old-age pensions PLUS socialized medicare for the Boomers... and really, are we going to starve the younger, productive generations so that the wealthiest and most unproductive class (the retired) get unrestricted, democraticly inspired welfare? I would suggest that any population which follows such a system will soon find itself extinct.

    One Baby Boomer got so upset at me saying this that he has cried and stalked me around the internet for four years about it.

    I don't really want to see them Euthanized, but, I suspect that as our economy crumbles and we simply can't pay $300,000 in medical bills for extending the elderly's lives for another month or two, the notion of euthanasia will gain more and more traction.

    The really sad thing is, by the time it becomes law, I suspect that the vast majority of Boomers will already have died, and the full brunt of it will fall on Generation X, rather than the Boomers... just like the pension plan, where in places like Canada, the government is already saying that in another 15 to 20 years (read: when Gen X retires), the retirement age will have to be raised beyond 65.

    Say this to a Boomer and he says, "Relax! It won't happen for 15 or 20 years... what are you worried about?"

    Just makes you want to punch that entire entitled generation in the mouth, doesn't it?

    ReplyDelete
    Replies
    1. Yes, they may rue the day they "empowered" themselves through contraception and abortion. It's math.

      Don't see forced euthanasia. With socialized medicine, I'd go long morphine. The government will make sure they are very comfortable. Lots of demand for hospice care. We'll see if latchkey kids will visit them in the nursing home.

      I don't see the "don't trust anyone over 30" generation being treated with the same respect and reverence as the generation that won WWII, but they're not going to be turned into Soylent Green. That's why bequeathing an inheritance is not as selfless as it would appear. It is an insurance policy.

      Delete
    2. Euthanasia was the boomers' idea anyway---their plan for offing dear old Mom and Dad and cashing in on their inheritance early, instead of letting the doctor get it. "Dying with dignity" my ass.

      Because the boomers have seen to it anything their kids might have inherited is gone, walking away, refusing to answer their phone calls, and letting nature take its course will do the job equally well for nothing. Euthanasia's too good for the boomers. Costs money for one thing, which, thanks to the boomers, the kids don't have to waste on their parents.

      Someone once said that "he who troubles his father's house shall inherit the wind." That, I dare say, is just fine by me. That's all I expected anyway.

      Delete
    3. If it is any consolation, the Islamics are going to get it worse next generation.

      People in the countries with a high literacy rate are having one and two child families ... but have over a half dozen siblings. And yet these countries have little automation, and are facing peak oil problems.

      They will melt down some time in the 2030's.

      The EU is just going to crash hard, and there won't be enough muzzies to import to fix it.

      The US has a better replacement rate in the Red States, and better industrial automation.

      Delete
    4. Hey! I'm a Boomer, and I have actual assets, due to always living within my means (well, except for about 5 years when our children were quite small - but, during that time, we were preparing ourselves for better jobs - which, we have worked for years).

      We had 3 kids - all currently tax-payers, one of whom has her own 3 kids. So, I feel that we've done our share - more than, actually. We're on track to completely retire in about 2 years, if we want to. We've been talking about working in a local Catholic school for a few years, just to get it off the ground - it's a high school, due to open next year.

      Our cars will be paid off, our house will still have a mortgage (we bought it 6 years ago). However, the payments will be comfortable, if we choose to keep it. We've been talking about cashing in, buying a motor home, and traveling, while we're still young enough to do it.

      No reverse mortgage for us, thank you.

      Delete
  2. You're mistaking the 'Greatest Generation' for the Boomers. The GG are the ones who brought us Lyndon Johnson, Bullets and Butter, no-fault divorce and the Great Society. The GG are also the guys who emptied the Social Security coffers, receiving many multiples of benefits received compared to taxes paid; only the long lived boomers stand a chance of getting back what they paid in and they can forget about interest on their 'investments'.

    The boomers are just an easy target for all us spoiled, delayed maturity, selfie loving toy boys and toy girls. Grow up children, it wasn't the boomers job to hand carry us across lifes crevices.

    ReplyDelete
    Replies
    1. IMHO, the greatest generation was the WWI era generation, my grandparents' generation. They had to raise a family during the Depression, work hard, save money, not be spend thrifts.

      They tried to warn the WWII generation about how they were raising their kids, but oh well...

      Delete
    2. Fair point. We can go back to Lincoln and the Civil War as the source of many of our problems too. And The Federal Reserve was created under Wilson. Every generation has its errors that flow forward through time.

      I think it comes back to the idea of this post, and that is the idea of inheritance, or lack of it. WWII inherited a depression, and a world war, and they conquered both and built a stronger country, they landed on the moon, won the Cold War, etc. There was tremendous good to offset the bad, and even the bad potentially would've worked if the work ethic and morals of the WWII generation had been carried forward faithfully.

      The Boomers took that inheritance and squandered it, and are passing on nothing good - maybe good music, wearing jeans to work, tops. The first Boomer President was Bill Clinton. Man he looked cool in sunglasses playing a saxophone. Rather than correcting the errors of their parents - Social Security, The Great Society, debt spending to defeat communism - they doubled, tripled, quadrupled down. And furthermore, they rebelled against the good things their parents achieved - values, morals, national pride, etc.

      The boomers are an easy target, and rightly so. The world was their oyster. Just what have they achieved? There are the individuals who created great things, but as a group, a generation - what is their legacy? Debt.

      Delete
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  3. Follow the money. The boomers live as debt serfs for two reasons: First, explicitly inflationary policies pursued by the government and the central bank drive asset prices higher dramatically faster than incomes, with the resulting differential to be financed by debt. Second, taxes.

    Your grandparents owned their home outright because they paid dramatically less for their home as a multiple of their average income. The infographic at the link below illustrates this clearly.

    http://visualeconomics.creditloan.com/the-cost-of-home-ownership/

    Assuming they earned middle class, your grandparents generation paid dramatically lower tax rates across the board. They paid little to nothing in FICA taxes, and dramatically lower federal, state, and local tax rates.

    Boomers' collective financial situation is a result of policy. Lower asset prices and lower taxes meant money in the bank for your grandparents in their golden years. Higher asset prices and higher taxes mean debt serfdom for baby boomers and future generations.

    The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. -V.I. Lenin

    ReplyDelete
    Replies
    1. I believe they voted for the higher taxes, debt spending, more regulations, more red tape, environmental regulations, bigger government, etc. Again, NABBALT. The Boomers are in charge now, and it's a mess, and it's not getting any better. If they didn't start the policy, they've continued it and expanded it.

      Delete
  4. Substitute "blacks" for Boomers and this would be a racist diatribe. It's not ALL Boomers, it is "some", and you haven't told us in this post "how many". Many of your points are correct. Many are not. There are millions of Boomers who never bought into the bullshit, who worked their entire lives, saved when it wasn't cool, usually bought second-hand cars, were monogamous within their marriages, fought against abortion, and who served in the Armed Forces. Be specific.

    ReplyDelete
    Replies
    1. When they've got nothing to say, they call you a racist.

      Do I really need to say "Not All Baby Boomers Are Like That"? Or "Not All Blacks Are Like That?" Or "Not All Muslims Are Like That"? Or "Not All Women Are Like That"? Or "Not All Christians Are Like That"? Okay, for all future posts, just to clarify: NABBALT, NABALT, NAMALT, NAWALT, NACALT, NA-Fill in the blank-ALT.

      So you were/are one of the good ones. Be happy you are one of the NABBALT.

      Delete
  5. Ponder this.
    Your widowed mother of whatever generation owns her home.
    It is her primary asset.
    She needs care of the sort that makes it risky for her to live alone.
    Do you take her in to live with you?
    Or do you find a nursing home for her?
    If she goes to a nursing home, how is she paying for it?
    Isn't that what her assets are for?
    Isn't that the best use of her primary asset - her home?
    Or do you gripe about not getting an inheritance because the home went to pay for her care?
    Worse, do you think your neighbors should pay for her care so you can get your inheritance?

    ReplyDelete
    Replies
    1. 1.) The number one reason for Boomers going the reverse mortgage route is to reduce or eliminate their mortgage payment. There will be no home to tap into to pay for them when they go into the nursing home. That's the point of the post - they are tapping into it now when they're relatively healthy to pay off debts.
      2.) People used to take in older relatives all the time. You know, when loyalty to family meant something. The Boomers changed that, so they'll sleep in the bed they've made - which will be at the nursing home, or in the gutter.
      3.) There is something called Long-term care insurance that is relatively cheap if started early enough (nearing retirement, rather than already retired). Depending on the policy, this insurance can help pay for a majority of the nursing home bill. I don't imagine many Boomers are responsible enough to purchase this product and plan for a time when they will be in a nursing home. After all, they've got Lifestyle Lifts, Viagara, and testosterone supplements to stay young forever.
      4.) Reverse mortgages are useful in certain circumstances, but using them to pay off the existing mortgage or debts is an indication of how irresponsible and reckless they have been with their money.

      Delete
  6. This comment has been removed by the author.

    ReplyDelete
  7. I will have my mortgage paid off by about the age of 64. So, no more monthly payments, right?

    Hardly. When I pay off my mortgage, at present rates my monthly payment will not go to 0. It will go to about 40% of what I'm paying now. The continued payment is what my mortgage company has been paying for me into escrow. In other words, I will still have to pay hundreds of dollars a month to the State (and, acting as their agent, to the County, the Village, the Library Board, the Sanitary District, 3 School districts, the Mosquito Abatement District, etc. ad nauseum) for the privilege of remaining in my home of what will then be some 30+ years. My parents didn't have to pay nearly that percentage or amount of money to the State to keep THEIR home from being taken from them by armed men and sold to the highest bidder. I may need a reverse mortgage at that time just to pay my taxes.

    ReplyDelete
    Replies
    1. Good point. Property taxes can be a bitch, depending on where you live. I loved how the taxes went up during the real estate boom, but haven't gone down during the real estate bust. You can't fight city hall.

      I do believe that most people on fixed incomes - Social Security, etc. - at least in my state, if that income is low enough, qualify for property tax refunds. In my GGCPS analysis, the refund can be as much as 2/3 of the property tax bill. So I can't imagine people having to go the reverse mortgage route to pay property taxes. If responsible people who have paid off their homes wind up mortgaging them to pay increased taxes, a societal collapse will surely follow, because it would mean the final destruction of the middle class.

      Taxes are a whole other story, and largely out of your control if you are not surrounded by like-minded people. But they are the most local of all our taxes in the US, and theoretically we have the most control over them. And, we've got to pay for fire, police, roads, parks, water, sewer, garbage, etc. somehow, and that somehow is through property taxes in most areas.

      Delete
    2. Here's the deal on property taxes, at least here in Illinois.

      1) The various tax-consuming bodies I listed come up with budgets. They may hold public hearings, but in the end they set them.
      2) They submit what they want to the County (who actually assesses the taxes).
      3) The County adds up all the requests and divides it by the total value of the property tax base. That gives you the overall rate of taxes/$1000 assessed value.
      4) That's multiplied by the total value of your property, and that's what you owe.

      So if your individual property value goes down disproportionately to the rest of the County, your taxes drop. But if EVERYONE'S property decreases in value, your taxes stay the same - or go up, as the taxing bodies increase their budgets.

      Delete
    3. My taxes are currently $5,600/year on a 1700 square foot tri-level with 3/4 acres of land. If someone bought it in my neighborhood the odds are 50/50 they level it and build new. When I become a senior citizen I get a $1000 cut in taxes - presuming that taxes don't go up, which is quite unlikely.

      Delete
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  10. I agree about the Boomers getting it all. They got to work at the same job of their choice for the majority of their careers, then keep all of the inheritances from WWII parents. I was actually promised "something" from both sides of the family, but since my parents had to "suffer" taking care of gma for a couple years, I never got a dime. They have since gone on numerous vacations around the world. Now with reverse mortgages, I'll probably get screwed out of a free house too. Generation Xers got the SHAFT!!!

    ReplyDelete
    Replies
    1. You don't need a dime, when and where in the bible does it say we are to leave you something but I did read this, (honor your father and mother). Did you visit and include your parents in your lives? Most of today's kids can't and don't have time to even call and see how they are. Oh they say they love you (WORDS), just words, QUESTION is do you LIKE YOUR PARENTS? I would rather be liked than loved, your generally around people you like, MY UNGRATEFUL KIDS GET WHAT THEY GAVE, NOTHING, St Jude will benefit & dying children the gift of life, not my worthless, & selfish kids.

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  11. Why is it the boomers place to leave you a nest-egg, when did you ever visit your parents, or even take the time to call once in a while to see how they are. That door swings both ways, I will leave my savings to St Jude children's cancer center. My kids are to busy with shopping and vacationing to be concerned with mom and dad. Well this will get their attention after we're gone and the lawyer reads my and moms will. PAYBACK TIME we got the LAST LAUGH you ingrates.

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  14. Thank you for sharing such great information.
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    what is reverse mortgage.

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