Reversal of fortune

Baby boomers, declares Brian Rezny, are the worst group of savers in the U.S. Rezny, a fee-only financial planner with offices in Naperville, Ill., and Naples, Fla., turns potential clients away “‘cause they simply don’t have enough money.” He says it’s very difficult to get them to cut back from living on $100,000 a year to $30,000 a year, and he wants to avoid lawsuits. So if prospective clients don’t have the funds to support their life style and are unlikely to make changes, Rezny won’t take them on. But home ownership is a form of savings after all, and for clients with too little savings but a lot of equity in their homes, Rezny sees reverse mortgages as a way out. A reverse mortgage “is a way to meet retirement goals more safely,” he says. “It gives your portfolio another five to 10 years to grow.” The CFP, who didn’t need to recommend this option five years ago and never even discussed it back then with his clients, is routinely recommending it now. “People just don’t have the money,” he says. “They lost a lot in 2008, and the horror stories were mounting, one after another: flipper homes; other poor investments, the implosion of real estate. They haven’t made up the losses, but they’ve been overspending and drawing down their principal—so they have much less to live on now than they did 5 years ago.” His advice? Short sell the properties they bought, clear up their debt and do a reverse mortgage.” Who shouldn’t do a reverse mortgage? Rezny says people with a nice size portfolio and possibly a pension. If that’s the their situation, then they should use their home as a safety net—a backup in the event that they live longer than anticipated or take an unexpected hit to their portfolio. For Rezny, this group is about 10% of his client base. The other 90% needs to take advantage of it now.