August 13, 2025 • 27 mins
Retirement planning has a serious problem: we're living much longer than previous generations, but our financial preparation hasn't kept pace. With many retirees finding themselves 45% short of what they'll need for a comfortable retirement lasting potentially 30+ years, what options do we have?
Laura Phillips, a licensed reverse mortgage specialist with over 25 years of experience, joins us to demystify one powerful but often misunderstood financial tool - the modern reverse mortgage. She tackles the elephant in the room immediately, acknowledging the product's controversial reputation while explaining how today's reverse mortgages differ dramatically from their predecessors. "It's not your grandmother's reverse mortgage," Phillips explains, detailing the significant consumer protections now built into these loans.
We explore the mechanics of reverse mortgages in straightforward terms, from how they calculate available funds (based on age, equity, and interest rates) to what happens when the homeowner passes away. Phillips brings compassionate insight to the emotional aspects of retirement planning, addressing the delicate balance between using home equity as a financial tool and honoring the sentimental value of the family home.
Perhaps most eye-opening is our discussion about financial education and America's retirement readiness gap. Phillips shares personal experiences that highlight how unprepared many of us are for financing decades of retirement, noting that even financial advisors struggle to project 30 years into the future. Her passion for helping seniors find solutions shines through as she encourages earlier, more honest conversations about aging and finances.
Whether you're approaching retirement age yourself or helping parents navigate their options, this episode provides valuable perspective on one potential strategy for aging in place with greater financial security. Connect with Laura Phillips to learn if a reverse mortgage might be right for your situation.
• Reverse mortgages have evolved substantially with improved consumer protections
• Modern reverse mortgages require both spouses on the loan and verify ability to pay taxes/insurance
• Homeowner age, available equity, and interest rates determine how much can be accessed (42-75%)
• Older borrowers can access higher percentages of their home's value
• Reverse mortgages work best when heirs aren't expecting to inherit the physical home
• The loan grows over time but has protections against going "underwater"
• Heirs can choose to sell the home or purchase it by paying off the loan balance
• Financial education about longevity planning should start much earlier in life
• A home should be viewed as both an emotional space and a potential financial tool
If you're 62 or approaching that age and thinking about retirement options, reach out to Laura Phillips at laura@lauraphillips.com or call 303-817-4611 to discuss whether a reverse mortgage might be right for your situation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Today on Senior Care Academy podcast, we are diving
into one of the most importantand often misunderstood topics
in retirement planning, which isfinancial strategies for aging
well or aging at home.
Joining us is Laura Phillips, alicensed reverse mortgage
specialist with over 25 years ofexperience in real estate
lending.
Lara's helped countlessfamilies navigate the
(00:29):
complexities of home financing,specializing FHA, hecm and
portfolio jumbo reverse loans.
She's based in Colorado andshe's made it her mission to
guide seniors, caregivers andfamilies through the reverse
mortgage process with clarity,compassion and strategy.
Her approach is rooted in apowerful belief that a home is
more than just a house.
(00:49):
It's one of the mostsignificant financial
commitments a person will makeand should support you in your
best years and not hold you back.
So let's welcome Laura Phillipsto the show.
I'm happy to have you here.
Speaker 2 (01:01):
Hi, thanks for having me.
Caleb Glad to be here.
Speaker 1 (01:03):
Yeah, so jumping kind of into your personal
background, you've seen peopleplan for retirement for over 25
years now.
What was your first wake-upcall about planning for the
future and planning forretirement that you think people
often miss?
Speaker 2 (01:22):
Oh, wake-up call.
I think we're still in thatwake-up call yeah, to be honest
with you.
I I think that this is apersonal opinion, um, probably
based on my own personalexperiences is that you can't
really plan for every incidentthat's going to happen in your
life, and much less where theeconomy is going to go and what
(01:44):
it's all going to cost.
You know it would be verydifficult for all of us to save
several million dollars to putaside.
So what do we do?
How do we handle that and Ithink that's what I do best with
seniors when we're talkingabout aging in places what
strategies can we look at tohelp that happen?
(02:06):
So yeah, I think that's a bigwake-up call still.
Speaker 1 (02:10):
Yeah, yeah, I think I can't remember the statistic,
because a lot of people, likeyou said, they spend all of
their working years saving and401k-ing and Roth IRA-ing and
all the things, and then theyget to retirement and they're
still like this isn't going tolast me the next 25 years, you
know.
And so I guess, as you'veserved hundreds of families,
(02:30):
what would you say is thebiggest misconception people
have about financial stabilityin retirement?
It could like is it the amountof money that you need, or just
what might it be?
Speaker 2 (02:41):
Well for one.
I don't think we ever thoughtwe were going to live an
additional 30 years.
What might it be?
Well for one.
I don't think we ever thoughtwe were going to live an
additional 30 years yeah.
So most of the retirements wereplanned probably for our
parents and our grandparents andthey didn't live much past
their retirement years.
The health you know.
There were a lot of reasons onwhy that happened, and so if we
were to retire at 60, we couldlive to be 90 years old.
Speaker 1 (03:05):
My grandpa just turned 90, last month yeah.
Speaker 2 (03:09):
So we need to think about that, and I think that
when people look at theirretirement and I love financial
advisors, I think they do afabulous job in helping people
build wealth but even they willadmit that it's hard for them to
kind of think about what'sgoing to happen in the next 30
years.
So that's probably the biggestthing that we all talk about
(03:32):
when we talk about what are wegoing to do.
Why would we look at a reversemortgage?
How can it help?
And one of the questions I askis what are your plans?
You're healthy now.
Things are looking really good,but what happens?
Life happens, unfortunately,and what do you have for plans
around those scenarios?
Speaker 1 (04:05):
expect retirement to be?
How much would you say it is onaverage of like oh, I've got a
million saved.
Or like in my whatever, that'sgreat.
How short do you think peopleare typically?
Speaker 2 (04:12):
Well, statistically they're showing us to be about
45% short.
So that's nationwide I would saythat's pretty individual to
areas that you live in and kindof the workforce of the area
that you're in.
So I don't know if I could sayindividually what I have.
I think I've seen it across theboard for people who are really
(04:34):
well, well repaired to do thisversus somebody who's more in
the 70 to the 45% and not asprepared.
So I've seen the entire scopeand again, it would probably
depend on the demographics ofwhere you are as to what those
numbers really look like.
Speaker 1 (04:50):
Yeah, I mean, even if you're 70% prepared and you're
living for 20 years postretirement, that's six years of
where you're out of money, whichis crazy.
That's a long time to livewithout money.
I'm curious.
So, growing up, is there anylike lessons that you learned
from your parents that stillring true and maybe have shaped
the way that you view retiringand finance and retirement?
Speaker 2 (05:15):
Well, I had a.
My parents were kind of aninteresting scenario.
I don't think I will follow intheir footsteps, probably
because it's not an availablesituation for me, but they
actually funded their entireretirement.
Speaker 1 (05:27):
Wow.
Speaker 2 (05:27):
I know, you know probably a rarity, to be honest
with you they didn't really havea lot of trust in giving money
to somebody else.
I think that's a hangover fromthe Depression era.
My parents were both earlyteens during the Depression, so
I think that was definitely ahangover from that.
(05:48):
And that thought pattern is,you know, keep the money within
yourselves.
So they funded their entiretime, which was great.
You know, I was really great.
We were grateful as kids becausenone of us were really able to
chip into the amount of moneythat it took to take dad through
his—my dad had Alzheimer's inthe end, and so that care is
(06:14):
outrageously expensive, andrightfully so.
I mean they are staffed 24-7.
They're in lockdown situations.
They need that care, but thecost is really high and we were
really grateful in the end thatmy folks had that money to be
able to do that.
Had they not, it would havebeen a lot more of a challenge
(06:34):
for all of us, for us kids, tobe able to try to help support
them through that.
So, taking that lesson forward,I'm scared to death of my quote
senior years, because I am notthat prepared.
I'm up there with the tail endof that 50,.
(06:55):
You know, I'm not the 45, butI'm also not the 100%.
I'm kind of in the middle.
I look at those numbers and Ithink how are we going to make
it?
What are we going to do and Idon't want to be a burden on our
children if we can help it.
Speaker 1 (07:08):
Yeah.
Speaker 2 (07:09):
So, yeah.
Speaker 1 (07:11):
So if you had to complete the sentence, what
would you say?
So the best retirement planstarts with yeah.
Speaker 2 (07:20):
Oh, oh.
This starts with admitting youneed one.
Admitting you need one.
A lot of people think I'veactually talked to some people
and this was probably my parentstoo they didn't think they were
going to die.
I mean, when it actually cameto that time in my mom's life
(07:43):
because she passed first shesaid you know, we just figured
we'd live forever.
So I think starting withknowing that there is an end and
to make it as comfortable asyou can for yourself and for
your family is a good thing tostart out with.
Start with that thought.
Speaker 1 (08:03):
Yeah, and start with that thought I would say as soon
as you can in life of like,eventually I'm going is it?
Is it a good thing to start outwith?
Start with that thought, yeah,and start with that thought I
would say as soon as you can inlife of like, eventually I'm
going to get older.
Hopefully, you know, I'll getold and I want to make sure that
it's a good experience Talkingthrough like cashflow and how
retirees can unlock, likebreathing room without burning
into their funds.
That's kind of where you comein in the reverse mortgage I
(08:25):
feel like it's had in the past.
I know it had a really badstigma because it was like a
five-year or seven-year orsomething, so it still didn't
solve it.
How have reverse mortgageschanged in the last decade or
two that's made it so that way?
It's something that peopleshould more seriously look into.
Speaker 2 (08:42):
It does have a negative reputation, something
that people should moreseriously look into.
It does have a negativereputation, and that's
definitely an elephant in theroom.
If you were to say to somebodyI'm thinking about a reverse
mortgage, they would get outgarlic and say run for the hills
because of that reputation andit's the Reagan era.
And so when it first came outthere were a lot of aha moments
(09:03):
they didn't think about.
They didn't think about in thattime period.
They put the man on the loanbecause he was traditionally the
bread earner the money earner.
And they didn't put the wife onthe loan, and so when he passed
which was also a traditionalthing it's the male pass first,
particularly that age group.
She was on the street,literally.
(09:23):
She was a widow on the street.
Speaker 1 (09:25):
It was like oh let's think about this.
Speaker 2 (09:27):
So they've made a lot of corrections to make it.
What I say is not yourgrandmother's reverse mortgage.
Both parties are on the loan.
We work with the youngestperson's age to make sure that
the youngest person hasviability to be able to stay in
the home comfortably.
Another thing that they nevergave a lot of thought to, but
now do, is can you afford to payyour taxes and insurance?
(09:51):
And one of the few ways thatyou can actually lose your home
with a reverse mortgage is notpaying your taxes and insurance
on time.
So it's a lien that goes aheadof all loans, and a reverse
mortgage is a loan, so it wouldcut ahead of that, and no lender
likes that at all.
So again, they didn't thinkabout that.
(10:12):
They didn't look at people'sincome and say, gosh, can they
afford to do this?
Can they afford to pay thetaxes and insurance on their own
?
Those are the two biggestchanges that I've seen in the
product that make it a much,much better product for people
today.
Speaker 1 (10:29):
How much?
I guess it totally depends,because if they bought like my
grandpa bought his house likebasically, or it was even gifted
to him maybe 70 years ago whenhe first got married gifted to
him maybe 70 years ago when hefirst got married.
So he has zero, like it's beenpaid off for forever.
So when he, if he were to do areverse mortgage, he could pull
(10:50):
out hundreds of thousands ofdollars compared to somebody
that maybe bought their house 10years ago.
But what kind of flexibility orlike buffer does on average,
would a reverse mortgage give tosomebody?
Speaker 2 (11:01):
Well, actually with a reverse mortgage I'm reverse
mortgage especially if I've hadmy book in front of me, of
course not, sorry.
So remember in high school youprobably worked with logarithm
tables In the back of the bookyou go over and down.
It's kind of a mathematicalformula.
It's the same with a reversemortgage the older you are you
will get more money accessed to,or more access to your equity.
(11:24):
The younger you are, you getless.
I call them three gears thatturn together to calculate
actually how much you can have.
One of them is your age, one ofthem is that the house is free
and clear or how much equity isactually available.
If you have a loan, you paythat off and then that's what is
accessible.
And the third one is theinterest rate.
So all three of these gearsturn together to tell us how
(11:47):
much of a principal balanceyou're allowed to have.
But the bottom line is the olderyou are, the more you're able
to get.
The younger you are, the less.
So at, somebody that's 62 yearsold probably would only get
about 42%, 43%, depending on theinterest rate.
Again, that's a big piece inthis.
Higher the interest rate,unfortunately, the less you
(12:08):
could have.
Lower the interest rate more,and that goes up to about 75
percent.
My oldest loan person was 92,and his house was free and clear
.
He wanted to use the reversemortgage as a legacy for his
children.
He had enough funds.
(12:28):
He felt like he was going to beable to handle his care, what
was left of his years his care.
So he used his reverse mortgageas a legacy for his kids and he
was able to get about 73% ofthe value of his home.
That's awesome.
Speaker 1 (12:41):
Yeah, and I guess it makes sense on the age thing,
because you don't want some 63year old to get 75% and then go
and splurge it in their firsttwo years and then all of a
sudden they don't have any.
Speaker 2 (12:52):
That actually did happen up until when President
Trump was the president first goaround.
They were able to.
People were able to get about70% earlier on and so that got a
big haircut with hisadministration that first go
round to actually prevent thatfrom happening, to prevent the
house from going.
We call it upside down, wherethe house is worth less than the
(13:14):
mortgage, and that was so.
Yes, the numbers now areconsiderably less than they were
10 years ago.
Speaker 1 (13:21):
My other question is so say that I get a reverse
mortgage at 70 and I live until90.
Obviously there's lots ofappreciation that's happening in
the house in that time, and sois it similar to a regular
mortgage where you'rerefinancing every few years with
the appreciation.
Does it kind of like?
If it's appreciating 3% everyyear?
(13:42):
Does it just add an additional3% automatically?
How does that all work?
Speaker 2 (13:47):
Well, I will say this is not a loan that I think
should be churned.
That's where you refinance itevery few years.
It's a forward loan, which we'veall done, and we look at, we
chase interest rates down.
We're very big on that.
We do that but this is anexpensive loan.
I'm not going to lie.
There are some good reasons forwhy it's expensive and there
(14:11):
are good protections behind it,but it's something that I would
say don't consider it your lastloan that you'll ever do, but
consider it a loan that youwould maybe only do one other
time.
I think I've answered thatquestion pretty well, if I
didn't get me back.
Speaker 1 (14:25):
Well, you answered the refinance part of it.
As far as the appreciation overthe 20 years, how does that
work out?
Speaker 2 (14:34):
We work with a nationwide average of 4%.
Now a lot of us have seen inthe last three years fabulous,
fabulous appreciation in ourareas.
Those are anomalies, I'm goingto tell you.
We would love to see that, butthat's just not going to happen
forever.
So we work with a nationwideaverage of 4%.
(14:54):
Now what happens is it is anegative amortization loan and
it's a big word, and what thatmeans is that the loan balance
grows.
You're not paying anything onit.
It's a loan where you do nothave to make any monthly
payments, but the interest getsaccrued.
It is a bank loan, so they'regoing to collect the interest
and they're going to tack it onto the balance.
So each month the balance oreach year the balance grows.
(15:16):
Now does that grow at 4%?
That's going to grow at theinterest rate.
One of the types of loansthere's two.
There's a fixed rate and a lineof credit.
The line of credit has anindividual growth that will grow
at about the same as theinterest rate.
So it's kind of confusing tothink about.
But what happens is if you geta loan at, let's say, 70, will I
(15:41):
see it go upside down at somepoint in that lifetime of the
loan?
The answer is yes and it willprobably be in the mid-90s or
longer.
So I think that's really thequestion you're looking at and
the reality is yes.
So if you started at 60, verypossibly you're going to see
that happen, you bet.
Speaker 1 (15:59):
Yeah, that's awesome.
And then all of it's with theassumption.
I guess not the assumption, butonce the individual dies, or
the partnership dies or passesaway, it's assumed that the
house will just be sold off.
The bank will sell the house,or I guess the kids could buy it
at that point.
I know that was one big barrierthat I've seen with people with
(16:22):
reverse mortgages.
That was one big barrier thatI've seen with people with
reverse mortgages.
It's like I was supposed to youknow, that was my retirement
thingy and the kids kind of getmaybe selfish around the use of
a reverse mortgage Cause they'relike that's my inheritance, you
know.
Speaker 2 (16:35):
Well, people are funny about money.
So you know, I try not to gothere.
I actually don't have a degreein therapy.
I feel like sometimes I shouldhave one.
It helps.
But yeah, and so if you'replanning on giving your house to
the children and you would liketo have it be free and clear,
like your grandpa got his housefree and clear, then the reverse
(16:56):
mortgage is probably not theloan to look at.
I'll be very honest with you,because at some point it's still
a loan.
It needs to be paid off.
Honest with you because at somepoint it's still a loan.
It needs to be paid off.
Now, what happens if bothhusband and wife or the parties
involved in the reverse how manythere are if they pass away?
What happens?
It goes to the estate.
The bank doesn't own your home.
(17:16):
It's a lien against your home,just like any other loan.
So you still have fullownership of your home and it
goes to the estate.
Now, if there's money left inthe house the house has value
still then the heirs can sell itor they can buy it.
They have those choices andthey have a time period to put
it on the market and sell it.
Pay off the reverse mortgage.
(17:37):
If the house is worth less thanthe loan, then you give the
keys back to the bank andthere's no fault, no harm.
Nobody's going to come afteranybody in any of the estates
and ask for additional money,and that's where the loan gets
expensive.
Is that particular insurancethat covers?
Speaker 1 (17:54):
that Kind of switching a little bit more to
the the emotional side of things.
You've said before that it'snot just a house, it's a home.
So how do you balance theemotional weight that it carries
of like being a home with thepractical financial reality of
how valuable a reverse mortgagecan be, even though maybe it
(18:15):
means that for the nextgeneration the home's not in the
family, or something like that?
Speaker 2 (18:19):
That's a tough call.
I mean, my husband looks at thehouse more as a home.
I look at it probably becauseof my business and my career.
I look at it as a financialtool and should be used as such
and with stewardship of handlingit as a financial tool.
So a lot will depend on it.
If the history of your familyand the culture that you have
(18:42):
grown up in is to get grandmaand grandpa's house and to hand
it down, then, as I said earlier, a reverse mortgage is probably
not the best loan for you.
There probably should be betterways to look at pulling out
equity.
It's hard to pull out equity,as I say, to punch a hole in the
wall and pull some of thatequity out.
You have to be able to coverthe cost.
(19:03):
But if you look at it as mykids are settled they don't even
live in the same state as I dodo they want the house?
Probably not, probably not.
Would they like the money?
Yes, they would probably likethe funds.
There's a reality to thatstatement.
Then maybe a reverse mortgagelooks at funds.
There's a reality to thatstatement.
Then maybe a reverse mortgagelooks at that and then we can
(19:23):
talk about that.
That's where I think I bring alot to the table.
When I visit with a client, Isit down and ask you want to
give your kids some money?
You want to leave it?
Well then, let's look at howmuch you really want to pull out
in equity and how do you wantto handle that.
Speaker 1 (19:45):
Now, once you have the that, they just don't go out
and buy a yacht and a boat anda airplane, they can go.
Speaker 2 (20:07):
Oh, you're right, we need to think about this,
because we do want to leave thechildren some money Maybe it's
not the full about, but we alsodon't want the kids to pay for
us, so it's it's and reality.
Speaker 1 (20:19):
It's saving the kids money, right?
If they're, it's saving them,it's maybe taking the future
money, but saving them needingto pay actively throughout
retirement for things that areexpensive like Alzheimer's care
and home care and all the things.
So it's definitely a goodoption.
We've got a handful of minutesleft, but if you could overhaul
(20:43):
the way that we teach retirementprep in America, what would you
want to change?
First, I didn't learn aboutretirement prep in my financial
ed class in 10th grade.
Speaker 2 (20:55):
And I think that maybe it even goes beyond
retirement prep, as it isfinancial stewardship of money.
They didn't teach that in myschool.
When I was in school, I didn'tknow how to balance a checkbook
oh my God, I mean, I got math, Icould add and subtract, but
(21:15):
nobody said I was supposed to dothat on a daily basis with my
checkbook.
And so I think financialeducation should be part of the
education early on, and maybe aclass somewhere in high school
or college, wherever you are,that it does teach you what it's
going to take to live, to be 90years old.
And we don't talk about that atall in this country, and I'm
(21:39):
not sure they do in othercountries either, but I can
speak to what we do speak abouthere in America is that we don't
talk about living that long andwhat that means, and I think
it's a conversation that shouldbe out there.
Speaker 1 (21:51):
Yeah, a lot of the people that we've had on this
podcast talk about how it'ssomething that people don't
think about until it's almosttoo little, too late, because
it's like, oh crap, I'm 69, 70now and my body's slowing down.
I guess I should think aboutthis and it's like way too late
at that point.
And then you see people workingat Walmart until their late 80s
(22:13):
.
You know like it's really hardand the life that they could
have had if they startedthinking about it at 50, 40, 30.
So, looking back at your ownjourney of being in this space,
what does financial peace mean?
Speaker 2 (22:33):
to you now compared to 25 years ago when you really
started all of this.
Well, there's some huge ahamoments as I meet with seniors,
I will say and some of them arepretty heartbreaking I mean, I
can't do loans for everybody andthere's some scenarios that
really break my heart in sadnessof not being able to help.
And I think again I'm of ageneration, I'm a boomer.
(22:53):
I'm of a generation that wasn'ttaught to think about this and
we probably thought as boomerswe were invincible and would
live forever also, so that'sbeen the biggest thing to learn.
So am I behind the wheel oftrying to catch up?
Absolutely, I'm just likealmost every other boomer out
there, looking at what can I doin my own household to make my
(23:19):
health better, my own personalhealth better and stronger, to
be able to live as well as I can, and I think that's the things
that I've seen the most, that Ididn't my 30-year younger person
didn't know at all.
Speaker 1 (23:34):
Yeah, I love that.
This is kind of a fun one.
But let's say you're looking atretirement down the road.
What is you?
Have your finances taken careof?
What is a perfect retirementday for you?
What does that look like?
Where are you at?
What are you doing?
Who are you with?
Speaker 2 (23:54):
Wow, I think I'll probably.
I love doing my work, so Idon't know if I'll ever really
retire.
I have the opportunity to workas much as I want or as little
as I want, and so it's theperfect blend.
And so will I ever see a fullretirement?
Probably not, but I willprobably take more time off.
And what do I see that?
I see that with my husband andmy two goofy German shepherd
(24:19):
dogs on the beach somewherewhere they're chasing seagulls,
and just in the sand and makingjust a muck of it.
I love the ocean, I lovehearing the ocean.
It's so soothing to me, andthat's funny because I live in
the Rocky Mountains.
There's no ocean here at all,but that would be my ideal world
.
If I could have that, thatwould be it.
Speaker 1 (24:41):
That's awesome.
I love that.
Last two questions is one whatare you most excited about in
the space or for your next fewsteps that you're working on?
Speaker 2 (24:54):
Next few steps Excited for me.
I love being able to be onpodcasts to talk to people about
reverse mortgages.
I feel like I'm a one-womanband cheerleader.
Look at it, consider it.
It's not that bad.
It's really a great financialtool if used and thought about
(25:16):
well.
Find somebody to work withthat's going to take the time to
step you through and ask youthose tough questions like what
happens if your spouse getsAlzheimer's?
What happens if, all of asudden, you have to take
medicines that are not coveredby your insurance and are
horribly expensive?
Let's talk about the thingsthat we don't want to talk about
(25:38):
and be able to start addressingthem.
If I can do anything, I wouldlove to see more of that out
there for seniors so they canreally address their needs
better.
Speaker 1 (25:49):
I love that.
And then my last question iswho should reach out to you and
where do they find you?
And we're going to put all thatonto the Absolutely.
And where do they find you?
And we're going to put all thatonto the Absolutely, absolutely
.
Speaker 2 (26:00):
Well, I would say anybody who's 62 or almost 62
years old that's thinking aboutretirement, reach out to me,
let's talk, let's have aconversation.
I'm pretty easygoing.
I'm not a salesperson in anyform or fashion.
Let's just look at the numbersand I've had people that have
talked to me for five years in arow and have not done the
(26:21):
reverse yet.
But we're having a conversation.
When is the best time for thatparty to do this product?
That's all I want people to dois to think about when is the
best time to look at thisproduct for their needs.
How do you reach me At laura atlauraphillipscom for their
(26:42):
needs?
How do you reach me At laura atlauraphillipscom that's with
two vowels for Phillips, or youcan call me 303-817-4611.
I do answer by phone.
Speaker 1 (26:52):
I'm it, I'm it.
Awesome, yeah, awesome.
It's been really insightful,learning a lot because I've had
reverse mortgages have been alittle bit of a black box for me
.
I've heard about them, I'veheard good and bad, and so it's
been fun diving into this withyou, laura.
I appreciate you taking sometime.
Speaker 2 (27:08):
Thank you, caleb, I do too.
Speaker 1 (27:10):
Thanks.
Today on Senior Care Academy podcast, we are diving
into one of the most importantand often misunderstood topics
in retirement planning, which isfinancial strategies for aging
well or aging at home.
Joining us is Laura Phillips, alicensed reverse mortgage
specialist with over 25 years ofexperience in real estate
lending.
Lara's helped countlessfamilies navigate the
(00:29):
complexities of home financing,specializing FHA, hecm and
portfolio jumbo reverse loans.
She's based in Colorado andshe's made it her mission to
guide seniors, caregivers andfamilies through the reverse
mortgage process with clarity,compassion and strategy.
Her approach is rooted in apowerful belief that a home is
more than just a house.
(00:49):
It's one of the mostsignificant financial
commitments a person will makeand should support you in your
best years and not hold you back.
So let's welcome Laura Phillipsto the show.
I'm happy to have you here.
Speaker 2 (01:01):
Hi, thanks for having me.
Caleb Glad to be here.
Speaker 1 (01:03):
Yeah, so jumping kind of into your personal
background, you've seen peopleplan for retirement for over 25
years now.
What was your first wake-upcall about planning for the
future and planning forretirement that you think people
often miss?
Speaker 2 (01:22):
Oh, wake-up call.
I think we're still in thatwake-up call yeah, to be honest
with you.
I I think that this is apersonal opinion, um, probably
based on my own personalexperiences is that you can't
really plan for every incidentthat's going to happen in your
life, and much less where theeconomy is going to go and what
(01:44):
it's all going to cost.
You know it would be verydifficult for all of us to save
several million dollars to putaside.
So what do we do?
How do we handle that and Ithink that's what I do best with
seniors when we're talkingabout aging in places what
strategies can we look at tohelp that happen?
(02:06):
So yeah, I think that's a bigwake-up call still.
Speaker 1 (02:10):
Yeah, yeah, I think I can't remember the statistic,
because a lot of people, likeyou said, they spend all of
their working years saving and401k-ing and Roth IRA-ing and
all the things, and then theyget to retirement and they're
still like this isn't going tolast me the next 25 years, you
know.
And so I guess, as you'veserved hundreds of families,
(02:30):
what would you say is thebiggest misconception people
have about financial stabilityin retirement?
It could like is it the amountof money that you need, or just
what might it be?
Speaker 2 (02:41):
Well for one.
I don't think we ever thoughtwe were going to live an
additional 30 years.
What might it be?
Well for one.
I don't think we ever thoughtwe were going to live an
additional 30 years yeah.
So most of the retirements wereplanned probably for our
parents and our grandparents andthey didn't live much past
their retirement years.
The health you know.
There were a lot of reasons onwhy that happened, and so if we
were to retire at 60, we couldlive to be 90 years old.
Speaker 1 (03:05):
My grandpa just turned 90, last month yeah.
Speaker 2 (03:09):
So we need to think about that, and I think that
when people look at theirretirement and I love financial
advisors, I think they do afabulous job in helping people
build wealth but even they willadmit that it's hard for them to
kind of think about what'sgoing to happen in the next 30
years.
So that's probably the biggestthing that we all talk about
(03:32):
when we talk about what are wegoing to do.
Why would we look at a reversemortgage?
How can it help?
And one of the questions I askis what are your plans?
You're healthy now.
Things are looking really good,but what happens?
Life happens, unfortunately,and what do you have for plans
around those scenarios?
Speaker 1 (04:05):
expect retirement to be?
How much would you say it is onaverage of like oh, I've got a
million saved.
Or like in my whatever, that'sgreat.
How short do you think peopleare typically?
Speaker 2 (04:12):
Well, statistically they're showing us to be about
45% short.
So that's nationwide I would saythat's pretty individual to
areas that you live in and kindof the workforce of the area
that you're in.
So I don't know if I could sayindividually what I have.
I think I've seen it across theboard for people who are really
(04:34):
well, well repaired to do thisversus somebody who's more in
the 70 to the 45% and not asprepared.
So I've seen the entire scopeand again, it would probably
depend on the demographics ofwhere you are as to what those
numbers really look like.
Speaker 1 (04:50):
Yeah, I mean, even if you're 70% prepared and you're
living for 20 years postretirement, that's six years of
where you're out of money, whichis crazy.
That's a long time to livewithout money.
I'm curious.
So, growing up, is there anylike lessons that you learned
from your parents that stillring true and maybe have shaped
the way that you view retiringand finance and retirement?
Speaker 2 (05:15):
Well, I had a.
My parents were kind of aninteresting scenario.
I don't think I will follow intheir footsteps, probably
because it's not an availablesituation for me, but they
actually funded their entireretirement.
Speaker 1 (05:27):
Wow.
Speaker 2 (05:27):
I know, you know probably a rarity, to be honest
with you they didn't really havea lot of trust in giving money
to somebody else.
I think that's a hangover fromthe Depression era.
My parents were both earlyteens during the Depression, so
I think that was definitely ahangover from that.
(05:48):
And that thought pattern is,you know, keep the money within
yourselves.
So they funded their entiretime, which was great.
You know, I was really great.
We were grateful as kids becausenone of us were really able to
chip into the amount of moneythat it took to take dad through
his—my dad had Alzheimer's inthe end, and so that care is
(06:14):
outrageously expensive, andrightfully so.
I mean they are staffed 24-7.
They're in lockdown situations.
They need that care, but thecost is really high and we were
really grateful in the end thatmy folks had that money to be
able to do that.
Had they not, it would havebeen a lot more of a challenge
(06:34):
for all of us, for us kids, tobe able to try to help support
them through that.
So, taking that lesson forward,I'm scared to death of my quote
senior years, because I am notthat prepared.
I'm up there with the tail endof that 50,.
(06:55):
You know, I'm not the 45, butI'm also not the 100%.
I'm kind of in the middle.
I look at those numbers and Ithink how are we going to make
it?
What are we going to do and Idon't want to be a burden on our
children if we can help it.
Speaker 1 (07:08):
Yeah.
Speaker 2 (07:09):
So, yeah.
Speaker 1 (07:11):
So if you had to complete the sentence, what
would you say?
So the best retirement planstarts with yeah.
Speaker 2 (07:20):
Oh, oh.
This starts with admitting youneed one.
Admitting you need one.
A lot of people think I'veactually talked to some people
and this was probably my parentstoo they didn't think they were
going to die.
I mean, when it actually cameto that time in my mom's life
(07:43):
because she passed first shesaid you know, we just figured
we'd live forever.
So I think starting withknowing that there is an end and
to make it as comfortable asyou can for yourself and for
your family is a good thing tostart out with.
Start with that thought.
Speaker 1 (08:03):
Yeah, and start with that thought I would say as soon
as you can in life of like,eventually I'm going is it?
Is it a good thing to start outwith?
Start with that thought, yeah,and start with that thought I
would say as soon as you can inlife of like, eventually I'm
going to get older.
Hopefully, you know, I'll getold and I want to make sure that
it's a good experience Talkingthrough like cashflow and how
retirees can unlock, likebreathing room without burning
into their funds.
That's kind of where you comein in the reverse mortgage I
(08:25):
feel like it's had in the past.
I know it had a really badstigma because it was like a
five-year or seven-year orsomething, so it still didn't
solve it.
How have reverse mortgageschanged in the last decade or
two that's made it so that way?
It's something that peopleshould more seriously look into.
Speaker 2 (08:42):
It does have a negative reputation, something
that people should moreseriously look into.
It does have a negativereputation, and that's
definitely an elephant in theroom.
If you were to say to somebodyI'm thinking about a reverse
mortgage, they would get outgarlic and say run for the hills
because of that reputation andit's the Reagan era.
And so when it first came outthere were a lot of aha moments
(09:03):
they didn't think about.
They didn't think about in thattime period.
They put the man on the loanbecause he was traditionally the
bread earner the money earner.
And they didn't put the wife onthe loan, and so when he passed
which was also a traditionalthing it's the male pass first,
particularly that age group.
She was on the street,literally.
(09:23):
She was a widow on the street.
Speaker 1 (09:25):
It was like oh let's think about this.
Speaker 2 (09:27):
So they've made a lot of corrections to make it.
What I say is not yourgrandmother's reverse mortgage.
Both parties are on the loan.
We work with the youngestperson's age to make sure that
the youngest person hasviability to be able to stay in
the home comfortably.
Another thing that they nevergave a lot of thought to, but
now do, is can you afford to payyour taxes and insurance?
(09:51):
And one of the few ways thatyou can actually lose your home
with a reverse mortgage is notpaying your taxes and insurance
on time.
So it's a lien that goes aheadof all loans, and a reverse
mortgage is a loan, so it wouldcut ahead of that, and no lender
likes that at all.
So again, they didn't thinkabout that.
(10:12):
They didn't look at people'sincome and say, gosh, can they
afford to do this?
Can they afford to pay thetaxes and insurance on their own
?
Those are the two biggestchanges that I've seen in the
product that make it a much,much better product for people
today.
Speaker 1 (10:29):
How much?
I guess it totally depends,because if they bought like my
grandpa bought his house likebasically, or it was even gifted
to him maybe 70 years ago whenhe first got married gifted to
him maybe 70 years ago when hefirst got married.
So he has zero, like it's beenpaid off for forever.
So when he, if he were to do areverse mortgage, he could pull
(10:50):
out hundreds of thousands ofdollars compared to somebody
that maybe bought their house 10years ago.
But what kind of flexibility orlike buffer does on average,
would a reverse mortgage give tosomebody?
Speaker 2 (11:01):
Well, actually with a reverse mortgage I'm reverse
mortgage especially if I've hadmy book in front of me, of
course not, sorry.
So remember in high school youprobably worked with logarithm
tables In the back of the bookyou go over and down.
It's kind of a mathematicalformula.
It's the same with a reversemortgage the older you are you
will get more money accessed to,or more access to your equity.
(11:24):
The younger you are, you getless.
I call them three gears thatturn together to calculate
actually how much you can have.
One of them is your age, one ofthem is that the house is free
and clear or how much equity isactually available.
If you have a loan, you paythat off and then that's what is
accessible.
And the third one is theinterest rate.
So all three of these gearsturn together to tell us how
(11:47):
much of a principal balanceyou're allowed to have.
But the bottom line is the olderyou are, the more you're able
to get.
The younger you are, the less.
So at, somebody that's 62 yearsold probably would only get
about 42%, 43%, depending on theinterest rate.
Again, that's a big piece inthis.
Higher the interest rate,unfortunately, the less you
(12:08):
could have.
Lower the interest rate more,and that goes up to about 75
percent.
My oldest loan person was 92,and his house was free and clear
.
He wanted to use the reversemortgage as a legacy for his
children.
He had enough funds.
(12:28):
He felt like he was going to beable to handle his care, what
was left of his years his care.
So he used his reverse mortgageas a legacy for his kids and he
was able to get about 73% ofthe value of his home.
That's awesome.
Speaker 1 (12:41):
Yeah, and I guess it makes sense on the age thing,
because you don't want some 63year old to get 75% and then go
and splurge it in their firsttwo years and then all of a
sudden they don't have any.
Speaker 2 (12:52):
That actually did happen up until when President
Trump was the president first goaround.
They were able to.
People were able to get about70% earlier on and so that got a
big haircut with hisadministration that first go
round to actually prevent thatfrom happening, to prevent the
house from going.
We call it upside down, wherethe house is worth less than the
(13:14):
mortgage, and that was so.
Yes, the numbers now areconsiderably less than they were
10 years ago.
Speaker 1 (13:21):
My other question is so say that I get a reverse
mortgage at 70 and I live until90.
Obviously there's lots ofappreciation that's happening in
the house in that time, and sois it similar to a regular
mortgage where you'rerefinancing every few years with
the appreciation.
Does it kind of like?
If it's appreciating 3% everyyear?
(13:42):
Does it just add an additional3% automatically?
How does that all work?
Speaker 2 (13:47):
Well, I will say this is not a loan that I think
should be churned.
That's where you refinance itevery few years.
It's a forward loan, which we'veall done, and we look at, we
chase interest rates down.
We're very big on that.
We do that but this is anexpensive loan.
I'm not going to lie.
There are some good reasons forwhy it's expensive and there
(14:11):
are good protections behind it,but it's something that I would
say don't consider it your lastloan that you'll ever do, but
consider it a loan that youwould maybe only do one other
time.
I think I've answered thatquestion pretty well, if I
didn't get me back.
Speaker 1 (14:25):
Well, you answered the refinance part of it.
As far as the appreciation overthe 20 years, how does that
work out?
Speaker 2 (14:34):
We work with a nationwide average of 4%.
Now a lot of us have seen inthe last three years fabulous,
fabulous appreciation in ourareas.
Those are anomalies, I'm goingto tell you.
We would love to see that, butthat's just not going to happen
forever.
So we work with a nationwideaverage of 4%.
(14:54):
Now what happens is it is anegative amortization loan and
it's a big word, and what thatmeans is that the loan balance
grows.
You're not paying anything onit.
It's a loan where you do nothave to make any monthly
payments, but the interest getsaccrued.
It is a bank loan, so they'regoing to collect the interest
and they're going to tack it onto the balance.
So each month the balance oreach year the balance grows.
(15:16):
Now does that grow at 4%?
That's going to grow at theinterest rate.
One of the types of loansthere's two.
There's a fixed rate and a lineof credit.
The line of credit has anindividual growth that will grow
at about the same as theinterest rate.
So it's kind of confusing tothink about.
But what happens is if you geta loan at, let's say, 70, will I
(15:41):
see it go upside down at somepoint in that lifetime of the
loan?
The answer is yes and it willprobably be in the mid-90s or
longer.
So I think that's really thequestion you're looking at and
the reality is yes.
So if you started at 60, verypossibly you're going to see
that happen, you bet.
Speaker 1 (15:59):
Yeah, that's awesome.
And then all of it's with theassumption.
I guess not the assumption, butonce the individual dies, or
the partnership dies or passesaway, it's assumed that the
house will just be sold off.
The bank will sell the house,or I guess the kids could buy it
at that point.
I know that was one big barrierthat I've seen with people with
(16:22):
reverse mortgages.
That was one big barrier thatI've seen with people with
reverse mortgages.
It's like I was supposed to youknow, that was my retirement
thingy and the kids kind of getmaybe selfish around the use of
a reverse mortgage Cause they'relike that's my inheritance, you
know.
Speaker 2 (16:35):
Well, people are funny about money.
So you know, I try not to gothere.
I actually don't have a degreein therapy.
I feel like sometimes I shouldhave one.
It helps.
But yeah, and so if you'replanning on giving your house to
the children and you would liketo have it be free and clear,
like your grandpa got his housefree and clear, then the reverse
(16:56):
mortgage is probably not theloan to look at.
I'll be very honest with you,because at some point it's still
a loan.
It needs to be paid off.
Honest with you because at somepoint it's still a loan.
It needs to be paid off.
Now, what happens if bothhusband and wife or the parties
involved in the reverse how manythere are if they pass away?
What happens?
It goes to the estate.
The bank doesn't own your home.
(17:16):
It's a lien against your home,just like any other loan.
So you still have fullownership of your home and it
goes to the estate.
Now, if there's money left inthe house the house has value
still then the heirs can sell itor they can buy it.
They have those choices andthey have a time period to put
it on the market and sell it.
Pay off the reverse mortgage.
(17:37):
If the house is worth less thanthe loan, then you give the
keys back to the bank andthere's no fault, no harm.
Nobody's going to come afteranybody in any of the estates
and ask for additional money,and that's where the loan gets
expensive.
Is that particular insurancethat covers?
Speaker 1 (17:54):
that Kind of switching a little bit more to
the the emotional side of things.
You've said before that it'snot just a house, it's a home.
So how do you balance theemotional weight that it carries
of like being a home with thepractical financial reality of
how valuable a reverse mortgagecan be, even though maybe it
(18:15):
means that for the nextgeneration the home's not in the
family, or something like that?
Speaker 2 (18:19):
That's a tough call.
I mean, my husband looks at thehouse more as a home.
I look at it probably becauseof my business and my career.
I look at it as a financialtool and should be used as such
and with stewardship of handlingit as a financial tool.
So a lot will depend on it.
If the history of your familyand the culture that you have
(18:42):
grown up in is to get grandmaand grandpa's house and to hand
it down, then, as I said earlier, a reverse mortgage is probably
not the best loan for you.
There probably should be betterways to look at pulling out
equity.
It's hard to pull out equity,as I say, to punch a hole in the
wall and pull some of thatequity out.
You have to be able to coverthe cost.
(19:03):
But if you look at it as mykids are settled they don't even
live in the same state as I dodo they want the house?
Probably not, probably not.
Would they like the money?
Yes, they would probably likethe funds.
There's a reality to thatstatement.
Then maybe a reverse mortgagelooks at funds.
There's a reality to thatstatement.
Then maybe a reverse mortgagelooks at that and then we can
(19:23):
talk about that.
That's where I think I bring alot to the table.
When I visit with a client, Isit down and ask you want to
give your kids some money?
You want to leave it?
Well then, let's look at howmuch you really want to pull out
in equity and how do you wantto handle that.
Speaker 1 (19:45):
Now, once you have the that, they just don't go out
and buy a yacht and a boat anda airplane, they can go.
Speaker 2 (20:07):
Oh, you're right, we need to think about this,
because we do want to leave thechildren some money Maybe it's
not the full about, but we alsodon't want the kids to pay for
us, so it's it's and reality.
Speaker 1 (20:19):
It's saving the kids money, right?
If they're, it's saving them,it's maybe taking the future
money, but saving them needingto pay actively throughout
retirement for things that areexpensive like Alzheimer's care
and home care and all the things.
So it's definitely a goodoption.
We've got a handful of minutesleft, but if you could overhaul
(20:43):
the way that we teach retirementprep in America, what would you
want to change?
First, I didn't learn aboutretirement prep in my financial
ed class in 10th grade.
Speaker 2 (20:55):
And I think that maybe it even goes beyond
retirement prep, as it isfinancial stewardship of money.
They didn't teach that in myschool.
When I was in school, I didn'tknow how to balance a checkbook
oh my God, I mean, I got math, Icould add and subtract, but
(21:15):
nobody said I was supposed to dothat on a daily basis with my
checkbook.
And so I think financialeducation should be part of the
education early on, and maybe aclass somewhere in high school
or college, wherever you are,that it does teach you what it's
going to take to live, to be 90years old.
And we don't talk about that atall in this country, and I'm
(21:39):
not sure they do in othercountries either, but I can
speak to what we do speak abouthere in America is that we don't
talk about living that long andwhat that means, and I think
it's a conversation that shouldbe out there.
Speaker 1 (21:51):
Yeah, a lot of the people that we've had on this
podcast talk about how it'ssomething that people don't
think about until it's almosttoo little, too late, because
it's like, oh crap, I'm 69, 70now and my body's slowing down.
I guess I should think aboutthis and it's like way too late
at that point.
And then you see people workingat Walmart until their late 80s
(22:13):
.
You know like it's really hardand the life that they could
have had if they startedthinking about it at 50, 40, 30.
So, looking back at your ownjourney of being in this space,
what does financial peace mean?
Speaker 2 (22:33):
to you now compared to 25 years ago when you really
started all of this.
Well, there's some huge ahamoments as I meet with seniors,
I will say and some of them arepretty heartbreaking I mean, I
can't do loans for everybody andthere's some scenarios that
really break my heart in sadnessof not being able to help.
And I think again I'm of ageneration, I'm a boomer.
(22:53):
I'm of a generation that wasn'ttaught to think about this and
we probably thought as boomerswe were invincible and would
live forever also, so that'sbeen the biggest thing to learn.
So am I behind the wheel oftrying to catch up?
Absolutely, I'm just likealmost every other boomer out
there, looking at what can I doin my own household to make my
(23:19):
health better, my own personalhealth better and stronger, to
be able to live as well as I can, and I think that's the things
that I've seen the most, that Ididn't my 30-year younger person
didn't know at all.
Speaker 1 (23:34):
Yeah, I love that.
This is kind of a fun one.
But let's say you're looking atretirement down the road.
What is you?
Have your finances taken careof?
What is a perfect retirementday for you?
What does that look like?
Where are you at?
What are you doing?
Who are you with?
Speaker 2 (23:54):
Wow, I think I'll probably.
I love doing my work, so Idon't know if I'll ever really
retire.
I have the opportunity to workas much as I want or as little
as I want, and so it's theperfect blend.
And so will I ever see a fullretirement?
Probably not, but I willprobably take more time off.
And what do I see that?
I see that with my husband andmy two goofy German shepherd
(24:19):
dogs on the beach somewherewhere they're chasing seagulls,
and just in the sand and makingjust a muck of it.
I love the ocean, I lovehearing the ocean.
It's so soothing to me, andthat's funny because I live in
the Rocky Mountains.
There's no ocean here at all,but that would be my ideal world
.
If I could have that, thatwould be it.
Speaker 1 (24:41):
That's awesome.
I love that.
Last two questions is one whatare you most excited about in
the space or for your next fewsteps that you're working on?
Speaker 2 (24:54):
Next few steps Excited for me.
I love being able to be onpodcasts to talk to people about
reverse mortgages.
I feel like I'm a one-womanband cheerleader.
Look at it, consider it.
It's not that bad.
It's really a great financialtool if used and thought about
(25:16):
well.
Find somebody to work withthat's going to take the time to
step you through and ask youthose tough questions like what
happens if your spouse getsAlzheimer's?
What happens if, all of asudden, you have to take
medicines that are not coveredby your insurance and are
horribly expensive?
Let's talk about the thingsthat we don't want to talk about
(25:38):
and be able to start addressingthem.
If I can do anything, I wouldlove to see more of that out
there for seniors so they canreally address their needs
better.
Speaker 1 (25:49):
I love that.
And then my last question iswho should reach out to you and
where do they find you?
And we're going to put all thatonto the Absolutely.
And where do they find you?
And we're going to put all thatonto the Absolutely, absolutely
.
Speaker 2 (26:00):
Well, I would say anybody who's 62 or almost 62
years old that's thinking aboutretirement, reach out to me,
let's talk, let's have aconversation.
I'm pretty easygoing.
I'm not a salesperson in anyform or fashion.
Let's just look at the numbersand I've had people that have
talked to me for five years in arow and have not done the
(26:21):
reverse yet.
But we're having a conversation.
When is the best time for thatparty to do this product?
That's all I want people to dois to think about when is the
best time to look at thisproduct for their needs.
How do you reach me At laura atlauraphillipscom for their
(26:42):
needs?
How do you reach me At laura atlauraphillipscom that's with
two vowels for Phillips, or youcan call me 303-817-4611.
I do answer by phone.
Speaker 1 (26:52):
I'm it, I'm it.
Awesome, yeah, awesome.
It's been really insightful,learning a lot because I've had
reverse mortgages have been alittle bit of a black box for me
.
I've heard about them, I'veheard good and bad, and so it's
been fun diving into this withyou, laura.
I appreciate you taking sometime.
Speaker 2 (27:08):
Thank you, caleb, I do too.
Speaker 1 (27:10):
Thanks.
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