Inflation is Here…and It’s Real
"Go and make interesting mistakes, make amazing mistakes, make glorious and fantastic mistakes. Break rules. Leave the world more interesting for your being here." —Neil Gaiman
If at a glance you said that the growth of Reverse Mortgage endorsements in the fiscal year 2021 was impressive you’d be mostly right. After all, FHA reported 49,207 federally-insured reverse mortgages were endorsed in the fiscal year 2021 which was an 18% increase from the prior year. However, one chart inside FHA’s Annual Report to Congress on the performance of the Mutual Mortgage Insurance Fund tells a different story. Over 20K of last year’s 49K endorsements came from the refinance of an existing reverse mortgage.
While the likelihood of inflation was dismissed in early 2020 by financial experts and teleprompter reading celebrities on the news, it turns out the minority of disbelievers have been proven right. Oh how we wish their predictions were wrong. Inflation is surging and where or when it stops remains to be seen.
Despite a historic 6-percent Social Security benefit Cost of Living Adjustment to be enacted in 2022 many retirees may still find themselves coming up short, thanks to actual inflation and the risk of continued price hikes. As a result,retirees will have to stretch every penny or find new sources of cash flow.
How Severe Has Inflation Become?
General Mills announced a 20-percent across-the-board price increase on all their products. Year-over-year the national average of gas prices surged 42 percent. Last week’s Thanksgiving turkey cost 27-percent more than it did last year. And most recently, the Dollar Store announced its intention to increase its prices to $1.25. That’s a 25% jump in prices at the now-ironically named retailer.
While we cannot stop inflation we can find a creative means to help curtail its impacts. Inflation is here and it is real. Now, what are you going to do to deal with it? What’s your plan? Are you willing to reduce your standard of living?
Reverse Mortgages can be used in a number of ways. Here are a few scenarios in which Cynthia has helped client’s add to their financial freedom despite inflation:
Added an additional “tax-free” monthly income source.
Eliminated mortgage payment, all credit card debts, and provided a line of credit to draw from in case of emergencies.
Removed the worry of ever having to sell or leave their forever home.
Downsized to a managable new home with less maintenance.