A few years back, I conducted and published research in the Journal of Financial Planning that showed Americans don’t understand reverse mortgages. In fact, respondents scored below 50 percent on a 10-question true-false quiz.
One possible explanation for the poor performance is a lot of misinformation floating about. A recent USA Today article titled “Considering reverse mortgages? Better to reverse course on this risky course” confirms my belief. The article contains many half-truths and misunderstandings and projects a negative connotation of reverse mortgages onto the reader.
It’s a similar uphill battle that annuities have faced – a somewhat complex concept that needs to be carefully reviewed, but it’s attacked and misrepresented in the broader media. As a result, people tend to shun annuities and reverse mortgages in their financial planning.