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Entries in Seniors (4)

Thursday
Dec062012

Senior Homeowners Warned of Risks of Reverse Mortgages

Stockbyte/Thinkstock(NEW YORK) -- Linda and Jim McMahan said they could not believe their luck in 1993 when they found their dream house.

"We loved it," she said. "It wasn't a huge house, but it was a nice size. ... It had the big trees in the yard. And we have deer in the yard every day, and wild turkeys. What more could you want?"

As is true for so many Americans, the McMahans' home in St. Croix, Wis., was the couple's dream and nest egg. That is, until their home was drained of its 19-year equity by a reverse mortgage and sold out from under Linda to pay it back as soon as her husband died.

"They must read the death notices, because I'd say within two days, I get a letter: 'Sorry to hear about your husband passing away,'" she said. "And they said, 'Well, you either have to buy the house or move out.'"

Only people 62 and older qualify for reverse mortgages. They work by giving homeowners the option of an immediate cash payment in exchange for the future value of their house upon death or sale.

When the McMahans applied for the reverse mortgage in 2005, Linda was under 62, so her name was not included on the reverse mortgage. When her husband died, Linda had no claim to her home of nearly two decades. She lost it.

The McMahans did receive the required counseling before receiving the mortgage and were aware she would no longer be listed, but were unclear about the process needed to add her name -- which would have required another refinancing when she turned 62 as outlined in their mortgage documents.

It's only one of the dangers inherent in the reverse mortgage that government officials are warning consumers about today.

According to the Department of Housing and Urban Development, right now in America, 57,000 seniors like McMahan are in danger of losing their homes -- a 9.8-percent foreclosure rate, four times higher than for traditional mortgages.

Reverse mortgages peaked in 2009, rising to an all-time high of 114,639; so far in 2012, 54,676 have been issued.

California currently has the most reverse mortgages with nearly 7,000 issued just this last year; Texas and Florida follow with 4,800 and 3,300 respectively.

Critics say the TV commercials, with celebrities like Fred Thompson and Henry Winkler, prey on vulnerable seniors by claiming homeowners can "turn their equity into tax-free cash."

Today, the government is warning: Reverse mortgages are not free money.

Prescott Cole, senior staff attorney for California Advocates for Nursing Home Reform, says seniors are a target because many have money saved, are often isolated and at times have "cognitive impairments" reducing their ability to make rational decisions.

"They're not being told about the downsides," Cole said. "When we hear about reverse mortgages, we're hearing the good things ... that these are loans that don't have to be paid back either until the senior dies or permanently moves out of the home ... they're told, nothing to worry about."

Peter Bell, the CEO and president of the National Reverse Mortgage Lenders Association, says the commercials are not misleading.

"How much can you get in a 30-second commercial?" Bell said. "These are not ads to get a reverse mortgage, but ads to get more information and learn about reverse mortgages."

Seventy percent of the time, seniors exchange the equity in their homes for the reverse mortgage payout as a lump sum and the money is too often spent by the time it's needed for late-in-life hardships.

The Department of Housing and Urban Development is expected Thursday to recommend that Congress limit large lump sum payments, and recommend seniors be very careful with reverse mortgages.

Hubert H. Humphrey III, the assistant director for the Consumer Financial Protection Bureau's Office of Older Americans, says that a reverse mortgage should be the last option.

"This is your nest egg. This is what you use when you don't have any other resources," he said. "People are not taking this out as a last available resource, they're all too often taking it out at age 62 right when they just qualify, and so they live another 15, 20, 25 years, and when they really need the money there's nothing there."

Humphrey said that couples who live together should always borrow together to protect both parties' interest in the property, so that the McMahans' experience will not happen.

By law, the Department of Housing and Urban Development requires counseling before someone receives a reverse mortgage, and recommends that extended family also take part to ensure the risks are clear, a stance NRMLA supports.

The National Reverse Mortgage Lenders Association also says that the industry itself has worked to improve counseling for potential borrowers.

"All in all there is a concentrated effort by all parties involved to improve counseling and we have seen a steady trajectory of its improving," Bell said.

According to the National Reverse Mortgage Lenders Association, reverse mortgages have helped more than 750,000 senior households and if the Department of Housing and Urban Development does recommend a limit on borrowing, the association will support it fully.

For Linda McMahan, the risks of her reverse mortgage -- an option she wishes she had never been presented -- now means living in a small apartment a block from her dream house.

"It's a wonderful house," she said. "I hope somebody will enjoy it."

AARP shared these links as resources:

5 Questions to Ask Yourself Before Considering a Reverse Mortgage

10 Things You Should Know About Reverse Mortgages

Copyright 2012 ABC News Radio

Tuesday
Nov202012

Older Workers Still Punching the Time Clock at Age 75 and Beyond

Ingram Publishing/Thinkstock(WASHINGTON) -- At age 81, Thomas Cooper has had a bout with cancer, and endured a back operation, but neither has convinced him to retire.

Instead, five days a week you'll find him selling men's shoes at a Nordstrom store in Bethesda, Md., just outside Washington D.C. "I would go crazy sitting around the house," Cooper told ABC News. "So I work."

A new study indicates he is hardly alone, according to government data analyzed by the AARP Public Policy Institute.

"The number and the proportion of people, 75 and older, in the workforce, they are on the increase," said Sara Rix, a senior strategic policy advisor with the Institute. "What we're seeing is really quite a remarkable increase in attachment to the labor force over the past 20 years or so."

According to the AARP analysis, in 1990, just four percent of the 75-plus crowd worked; now that's up to seven percent. That equates to nearly 1.3 million people in this age group who are employed. It's a small percentage of the overall workforce, just less than one percent, but that's still more than double the percentage a few decades ago.

Perhaps even more astonishing is that their unemployment rate has jumped as well, meaning a lot of these folks are looking for work. AARP's analysis found the unemployment rate for the 75 and older group was 2.3 percent in 1990. It was 5.6 percent last year.

Rix says there's a host of reasons behind the increases. For one, individuals can continue to work because they're staying healthier longer. "I suspect most people are there because they're doing something they really want to do. They enjoy their work. They're making a contribution."

There are also financial considerations. With the drop in home prices, the fluctuating stock market, and the decline in pensions, some older workers simply have to work.

For Cooper, that's definitely part of the equation. "When you get my age, you have a lot of doctor bills and different ailments. You have to pay the doctors and hospitals, so I am here," he said.

A recent survey by Wells Fargo found that nearly a third of Americans figure they'll need to work until age 80, in order to retire comfortably. The federal government estimates that by 2020, 10 percent of those aged 75 and older will be in the labor force. Rix believes the number is likely to be even higher.

Just last week the issue of older workers hit a chord on Capitol Hill, when House Minority Leader Nancy Pelosi was asked whether she should give up her leadership position to make way for younger lawmakers. Pelosi, who is 72, later told ABC News's Martha Raddatz that she was "amused" by the question, although at the time she called it "quite offensive."

Pelosi questioned whether male lawmakers would be asked the same age question.

Rix agrees, "So it may have been not only age discrimination implicit in that question, but perhaps also sex discrimination, as well. If someone can do that job, that's what we ought to be focusing on."

Shoe salesman Cooper believes older workers offer an advantage. "They have more experience, they know the products better, they know how to talk to people, and that's what matters."

Cooper, who's been in the shoe business for decades, but got his current job 17 years ago at the ripe young age of 64, says he has no plans to retire.

"I've been very fortunate that most of the managers here have been very good to me," he said. He was worried that "you get to a certain age and they want you out of here," but that hasn't happened to him. So his plans are to stay on the job. "I am going to keep working until I can't do it anymore," he said.

Copyright 2012 ABC News Radio

Friday
Nov092012

Some Seniors Resist Electronic Social Security Payments

Comstock/Thinkstock(NEW YORK) -- Glenn Smallwood does not have a cellphone, computer or credit card.  Nor does he have a bank account.  And that’s exactly the way he likes it.

“I guess you could say I’m an old fuddy duddy,” Smallwood, 63, a semi-retired insurance salesman in Clearwater, Fla., told ABC News.  “I’m set in my ways.  I don’t want my money in a bank.  I keep my money in my pocket.”

So when Smallwood received a notice from the U.S. Treasury Department informing him that as of March 2013, his Social Security checks would be directly deposited into his bank account -- or he could enroll in the government’s Direct Express Debit MasterCard program -- he was decidedly unhappy.

“I don’t think the federal government has the right to tell me that I have to have a checking account or a debit card,” Smallwood said, adding that he cashes checks at Wal-Mart, pays his rent by money order and has no plans -- or desire -- to stop.

Smallwood lives in one of the nation’s 10 million households that are unbanked, according to figures from the Federal Deposit Insurance Corporation (FDIC).

While waivers are automatically granted for anyone who was 90 years old or older on May 1, 2011 -- as well as people living in remote locations or those who are mentally incapable of handling their own affairs -- Dick Gregg, the fiscal assistant secretary of the Treasury, acknowledged that these waivers are rare.

“Most individuals that receive checks will drive to a local bank to cash them and individuals with mental impairments will designate a representative payee that will sign up for electronic payment,” he said.

He added that the initiative to have all benefits payments made electronically will save an additional $1 billion in taxpayer money over 10 years.  It is also safer, faster and more reliable than receiving paper checks, which can be lost, stolen or delayed.

But John Runyan, executive director of Consumers for Paper Options, an advocacy group funded by “paper-based communications interests” -- which includes the Envelope Manufacturers Association, the American Forest & Paper Association and paper companies -- believes the mandate is unfair to seniors like Smallwood who don’t want to change.  

”Our goal is to get the federal government to recognize fully that there is certain type of information that should continue to be provided on paper if the consumer wants them, and that should be the consumer choice,” he told ABC News.

Copyright 2012 ABC News Radio

Friday
Aug102012

Seniors Have Both High Hopes and Major Concerns About the Future

Digital Vision/Thinkstock(NEW YORK) -- Despite tough economic times, at least one group of Americans is bullish about their future. They’re the baby boomers born between 1946 and 1964.

In a poll conducted of 2,250 people ages 60 and older by the National Council on Aging, UnitedHealthcare and USA Today, 75 percent of baby boomers believe life will continue to get better, due in large part to people working longer and advancements in healthcare.

However, their optimism is also tempered by some realism about the way the economy has stagnated, with a third of this group worried that they won’t be able to pay for long-term care, while 20 percent say that a major financial downturn would seriously affect their fiscal situation.

Just over seven in ten seniors earning under $30,000 annually, which is considered low income, admit to a lingering health problem and that they’re less likely to exercise than their more financially secure counterparts.

Meanwhile, about a fifth of seniors over the age of 65 are still working either full- or part-time, some because they want to, other because they have to in order to make ends meet.

“Aging in place” is another goal of most seniors -- that is, living in their own homes. Most people in their 60s say that it’s feasible to live independently, although less than half of folks in their 70s see that as a realistic possibility.

There’s another major concern brought up by the respondents in the survey -- that is, the availability of resources and services in their communities, with more than a fourth of people in their 60s worried that a lack of these services will make it more difficult to “age in place.”

Copyright 2012 ABC News Radio







ABC News Radio