A reverse mortgage lets you borrow against your house until the bank owns it. An annuity lets you give an insurance company a pile of cash so they can send you smaller piles of cash until you die. The article frames this as a choice. Like asking whether you'd rather be kicked in the left shin or the right one.
Reverse mortgages exist because someone looked at a paid-off house and thought "this asset isn't generating enough anxiety." Now your home equity becomes a monthly check. The catch is you're taking a loan against the thing you sleep in. When you die, your kids get whatever's left after the bank takes its cut. Spoiler: it's not much.
Annuities guarantee income the way a gym membership guarantees abs. Technically true if you squint. You hand over a lump sum. The insurance company promises to pay you back in installments. They've done the math. They know exactly when you'll die. You don't. That's called an edge.
The best part is framing this as retirement planning. You're not planning for retirement. You're planning for the part where you run out of money before you run out of life. That's not a plan. That's a countdown.
Here's what you need to know about each: both products exist because you didn't save enough. The reverse mortgage admits you bought too much house. The annuity admits you're scared you'll live too long. Neither one is a strategy. They're both just expensive ways to admit you f*cked up thirty years ago.
Homeowners will read this article and feel informed. They'll weigh the options. They'll consult their advisor who gets a commission either way. Then they'll pick the one that sounds less like giving up. But it's the same thing. You're just choosing which institution gets to profit from your poor planning.
The correct answer is neither, but you can't afford that option anymore.
Photo by Artful Homes on Unsplash
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