As more seniors age alone, could reverse mortgages become key?
DDA Mortgage • December 7, 2022
According to recent statistics, a higher number of American seniors are aging without a living spouse or biological children, raising questions about who will care for them if serious health issues or financial problems occur later in life.
Issues associated with “kinless” seniors were highlighted this week in a New York Times article. According to a cited study, roughly 6.6% of Americans aged 55 or older have no living spouse or biological children, and 1% lack a spouse, partner, children or biological siblings. These figures translate to nearly 1 million seniors who are aging without a spouse, partner, children or siblings, and roughly 370,000 are women at or over the age of 75.
“Several demographic factors have fostered increased kinlessness,” according to the Times. “Baby boomers have lower marriage rates and higher divorce rates than their parents, and more have remained childless. The rise of so-called gray divorce, after age 50, also means fewer married seniors, and extended life spans can make for more years without surviving family.”
Reverse mortgage professionals have often said that the product may be more efficient for borrowers who do not intend to leave their homes to an heir, but if family is in the mix, then there may be an inclination to do so.
Shai Akabas, director of economic policy at the Bipartisan Policy Center (BPC), voiced a similar opinion to RMD in a 2021 interview.
“Despite ads attempting to explain reverse mortgages, people struggle to wrap their heads around the relatively complex product. HELOCs, for example, are easier to understand,” Akabas said. “The bequest motive is strong—people often want to keep their residence in the family.”
Reverse mortgage professionals have also historically looked to older divorced homeowners as a potential path for business growth. After the general upheaval that can accompany a divorce, a reverse mortgage can be strategically deployed to sort out finances, according to Christina Harmes Hika, a reverse mortgage professional in San Diego.
“A reverse mortgage can really be a great tool during a divorce to help achieve both spouses’ goals,” Harmes Hika said in a 2019 interview. “My approach with all clients is to listen first for understanding, and I think that’s even more important in a divorce situation.”
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Here’s a clearer breakdown of what lies ahead for Social Security as it turns 90: 1. Trust Fund Depletion: A Real and Growing Threat 2025 Trustees Report projects that the OASI (Old-Age & Survivors Insurance) Trust Fund will be depleted by 2033 . At that time, beneficiaries would receive only about 77% of scheduled benefits. Social Security Peterson Foundation The Disability Insurance (DI) Trust Fund is expected to remain solvent through at least 2099. Social Security Peterson Foundation If OASI and DI were merged hypothetically, the combined OASDI reserves would be exhausted around 2034 , with roughly 81% of benefits payable at that time. Social Security AARP Other sources echo this timeline: some forecasts suggest insolvency might arrive as early as 2033 or 2034 , with 20–26% cuts unless reforms are enacted. The Week+1 TIME+1 The Sun Kiplinger investopedia.com 2. Contributing Factors to the Crisis Demographics : The worker-to-beneficiary ratio has plummeted—from 16.5 per retiree in 1950 to around 2.7 today—coping with an aging population and declining birth rates. The Sun investopedia.com Peterson Foundation Wikipedia Policy Changes : Recent laws like the Social Security Fairness Act (2025) that restored withheld benefits for certain groups raised payouts without funding offsets, accelerating depletion. AARP investopedia.com Reduced Agency Resources : The SSA saw significant staffing reductions—estimates suggest about 20% of field staff were let go —compromising service delivery. investopedia.com HousingWire 3. What Happens After Depletion? Benefits won't vanish—but if no corrective action is taken, they would be automatically reduced to the level sustainable by ongoing payroll tax revenue—approximately 77–81% of the current scheduled amounts. investopedia.com TIME AARP Peterson Foundation That represents a 19–23% cut in benefits. For instance, a retiree currently receiving $2,000/month would see payments drop to around $1,545–$1,600/month . investopedia.com TIME The Week 4. Solutions & Proposals to Preserve the Program Here are some of the leading ideas under consideration: a. Raising Revenue Payroll Tax Increase Tax hikes—from 12.4% toward 16% —could close funding gaps, though they carry economic trade-offs. The Sun The Week Wikipedia Bipartisan Policy Center Tax Higher Incomes or Remove the Earnings Cap Increasing or eliminating the taxable earnings ceiling, or taxing benefits/investment income, could improve funding. AARP Wikipedia Bipartisan Policy Center Kiplinger b. Reducing or Restructuring Benefits Reduce Benefits for New Recipients A modest 5% cut starting in 2025 could extend solvency only a few more years. AARP Means-Testing or Adjust COLA Lowering cost-of-living adjustments (COLA) or reducing benefits for wealthier retirees could help but are unpopular. AARP Raise Retirement Age Gradually Incremental increases to the full retirement age could yield sizable savings. AARP c. Structural Reforms & Investment Strategies Bipartisan Investment Fund (Cassidy–Kaine Plan) This proposal would inject $1.5 trillion into a separate fund that invests in stocks and bonds, aiming to generate growth over 75 years and preserve all benefits without resorting to general government borrowing. The Washington Post investopedia.com Brookings Blueprint Advocates a system that maintains core principles, ensures universal participation, and restores long-term solvency without expanding general fund use. Brookings 5. The Road Ahead: What’s Likely to Happen? Inaction isn’t an option—delaying reform would escalate the scale of necessary changes. Peterson Foundation The Week Kiplinger Politically, topics like benefit cuts, tax hikes, and raising the retirement age remain extremely sensitive. Successful reform will likely involve a mix of revenue increases, eligibility tweaks, and investment innovations , crafted in a way that spreads burden fairly and maintains public support. Some bipartisan pathways—like the Cassidy–Kaine plan—offer creative long-term strategies, but most require immediate bridging solutions (e.g., modest tax increases or cost adjustments) to prevent cuts in the next decade. Didier Malagies nmls212566 DDA Mortgage nmls324329
