A couple of interesting surveys of senior citizen attitudes have crossed our desk in recent weeks. Both were sponsored (or co-sponsored) by reverse mortgage lenders.

Liberty Reverse Mortgage: Grandparent’s Cost Index

Liberty Reverse Mortgage (soon to be part of Genworth Financial) and Sacramento State University released their second annual Grandparent’s Cost Index earlier this month to coincide with Grandparent’s Day (September 9th). The upshot: Because of financial constraints, almost three-quarters of grandparents in the U.S. aren’t able to spend as much as they’d like to on their grandchildren.

The survey goes on to note that “Grandparents who have mortgages spend a lot less than those who do not.” (Presumably this statement only applies to traditional forward mortgages requiring a monthly loan payment.) Given the survey sponsorship, it’s not surprising that reverse mortgages are offered as the antidote to get rid of the burdensome mortgage payments and free up cash flow for the better things in life - like the grandkids.

Grandparents do not have any extravagant needs, they just want to be able to provide for themselves and spend money on their children and grandchildren. They simply don’t have the cash flow to accomplish this.

According to a study released by the National Reverse Mortgage Lenders Association, age 62+ U.S. households, which comprise the majority of grandparents, have $4.3 trillion tied up in their home equity. If they were able to tap into even a small percentage of this equity, it would have a big impact on the nation’s economy. According to the study, additional spending could reach up to $56.2 billion.

Financial Freedom: Senior Sentiment Survey 2007

A more comprehensive survey of “younger” senior citizen (62-75) attitudes also was released during September. This survey was sponsored by Financial Freedom and conducted by the Harris Interactive research firm. The survey covered a broad spectrum of senior attitudes including their degree of confidence in retirement income sources, strategies for funding retirement, and debt levels in retirement.

If anything, this survey makes it clear that reverse mortgages, though growing rapidly in relative terms, still haven’t caught on as a mainstream retirement tool. In many ways, the findings mirror those of an earlier study on reverse mortgage attitudes conducted by Fidelity.

The complete survey report runs more than sixty pages. Here’s a few of the findings I though were of most interest:

• A surprisingly high percentage (83%) of younger seniors indicated that they were at least “somewhat confident” they will have enough income to meet their needs during retirement.
• Only two percent foresee that proceeds from a reverse mortgage will be one their retirement income sources.
• Fifty-six percent of seniors plan to live in their current residence indefinitely. Of the 23% that expect to move, the most common reasons to move were to reduce housing costs (39%), smaller home (34%) and to move to a different state (33%).
• The majority (69%) do not have, or do not plan to have, any debt in retirement.
• A little over one-third of seniors still carry a mortgage on their homes. Of those, about half of them are doing so because they never paid off their existing mortgage, about 20% to receive tax breaks, and another 16% took out a second mortgage. Only 2% took out a reverse mortgage.

For some reason, Financial Freedom has decided not to make the full survey available online. However, you can obtain a copy by sending an email to mgelormino@riverinc.com

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