It can be awkward to guide your parents on financial matters, but opening a conversation about retirement needs can be invaluable. Reverse mortgages or home equity conversion mortgage loans can be an important part of the solution.
How do I talk to my parents about RMs / HECMs?
Starting a conversation with your parent or parents about liquefying what could be their largest asset may be uncomfortable.
Your folks may not be willing to talk about their finances with you -- they might feel ashamed to reveal that they are struggling to manage their money or share their worries about the future. A conversation about leveraging their home to cover their needs may bring feelings of guilt that they can't adequately manage on their own any longer or won't be able to pass on the home's value to you as they had always planned. They may also have expectations that you will be picking up the financial slack as needed or will be managing any property obligations for them down the line.
If you expect them to be reluctant to talk, it's not likely to be an easy conversation, and may need to be one that starts from a place of concern. You might begin with something as simple as, "Mom, are your finances okay? Do you have any worries about making ends meet?"
Or, it might begin with a question about the house itself. "Dad, do you think that it would be a good idea to add some handrails in the bathroom, or add a ramp next to the front stairs at some point?" Perhaps something as innocuous as, "Mom, if you could update or make changes to this place, what would you do?" This could lead into a natural discussion about income, cash flow, assets and debt.
You may have had some of these kinds of conversations in passing, or even heard a parent express regret that he or she isn't spending their retirement in the manner they hoped… not visiting distant family, not traveling or gaining the experiences they have always coveted. You could even ask: "Are you spending your retirement the way you wanted or expected to? Why or why not?" It may be that money concerns are intermingled in a way that fosters a conversation about ways to make these things happen with a reverse mortgage.
Health issues can also be a place to start or continue a conversation. If your parent is having trouble negotiating stairs, can't carry heavy laundry baskets or struggles under exertion, this might be a chance to talk about housing changes or getting assistance for routine tasks, avenues which can often lead to conversations about finances.
When the topic is broached, you might also express that it is their money to use as they see fit, and that you have no expectations about any inheritance, and that it is better they should have the best for themselves, which could potentially alleviate any guilt on their part.
Talking with your siblings (if any) can come into play, too. If they aren't in agreement on the advantages of using a reverse mortgage to support or sustain your parent's desired lifestyle, you may have to convince them that the use of a reverse mortgage is a good thing for the long haul. This may especially be the case if you are the one currently (or are expected to be) responsible for making certain your parent(s) and their home are both kept in good shape, whether physical or fiscal.
If your siblings are unwilling or unable to take on a larger role of support, you'll need to make the case to them that the use of a reverse mortgage can support your efforts and provides a substitute for their direct involvement in maintaining your parent's lives. Considering this avenue might become the basis for a conversation with them.
None of these discussions are likely to be easy, but they are necessary. All parties affected by the decision to take a reverse mortgage need to be aware of what's happening and how it will affect their present and future.
All family members living in a home where a reverse mortgage is in place should understand what will happen when the borrower dies. The next article in this section provides guidance.
Next: Reverse mortgage protections for spouses and other household occupants
Previous: Discussing reverse mortgages with your kids
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