Presumably you are considering a reverse mortgage because you’ve determined that you have an immediate or future need to supplement your retirement income. Perhaps medical bills are mounting or perhaps you are feeling pinched by the need to pay for essential home repairs. Or, perhaps you’ve concluded that since you have home equity available and it can help you achieve a better standard of living, why not just do it?

Conventional wisdom holds that seniors live on fixed incomes that are continually being eroded by inflation. This is true, but there are other forces at work that counteract the negative effects of infation. In fact, government data shows that there is an inverse relationship between aging and spending - in other words, people tend to spend less as they age.

As example, during the initial years of retirement, many households experience higher spending as long put-off trips, new cars, or other retirement rewards are bought. After several years, though, spending tends to taper off in areas such as entertainment. Data from the U.S. Department of Labor Bureau of Labor Statistics illustrates this trend.

Notice that spending in most categories healthcare being an important exception trends lower with age. Of course, this data represents averages across the country and your specific circumstances may be far different. If you are looking into a reverse mortgage because of perceived future needs, you may want to consider whether this trend may apply to you. Take a look at friends and relatives and judge whether they seem to be spend less as they age.

In any event, prior to obtaining a reverse mortgage, you should go through the exercise of preparing a budget worksheet. Always look for areas where you can reduce expenses or increase income. Going through this exercise will accomplish two important goals: 1) help you critically assess your need for a reverse mortgage and, if needed, 2) provide a measure of the monthly income you’d like to achieve from a reverse mortgage.

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6. Have I considered other options to reverse mortgages?