The Rise of Reverse Mortgages

The New York Times explored reverse mortgages and concluded that they are becoming respectable, though it referred to them as “a necessary evil.” The big news in the article is that many local and community banks are entering the reverse mortgage market. So, don’t think you’re restricted to the large banks or the firms who peddle them through late-night television commercials and infomercials.

I walked into their headquarters with my own strong feeling that reverse mortgages are an increasingly necessary evil. In an ideal world, everyone pays for their expenses in old age from Social Security and retirement savings and keeps any home equity intact for their heirs or for nursing home care.

But nearly every week brings new signs that many millions of Americans will not have enough money to retire comfortably — or at all — in the coming decades. One recent Federal Reserve survey of people whose employers offer a retirement plan but who do not participate shows that 27 percent of them say they cannot afford to save any money.