Loans borrowed against pensions squeeze retirees

[mickeyd]

I was unaware that one could take a loan on a pension. Article opened my eyes if it is true. I guess all of those TV ads by A.G. Wentworth are refering to this. Another way to take advantage of folks who have taken no time to learn about basic personal financial issues?

The allure of borrowing against pensions underscores an abrupt reversal in the financial fortunes of many retirees in recent years, as well as the efforts by a number of financial firms, including payday lenders and debt collectors, to market directly to them.

The pension-advance firms geared up before the financial crisis to woo a vast and wealthy generation of Americans heading for retirement. Before the housing bust and recession forced many people to defer retirement and to run up debt, lenders marketed the pension-based loan largely to military members as a risk-free option for older Americans looking to take a dream vacation or even buy a yacht. “Splurge,” one advertisement in 2004 suggested.

Now, pension-advance firms are repositioning themselves to appeal to people in and out of the military who need cash to cover basic living expenses, according to interviews with borrowers, lawyers, regulators and advocates for the elderly.

Loans borrowed against pensions squeeze retirees - Economy Watch on NBCNews.com

 

[samclem]

I was unaware that one could take a loan on a pension.

Yes, the law seems inconsistent on this point. For example, it is illegal ("prohibited"? "not allowed"?) to use an IRA as collateral for a loan.

 

[keegs]

I tried to list the reasons someone would do this. I can't imagine that someone would take a pension loan for a yacht or a vacation as some of the advertizing suggested. Here's what I came up with:

Poor health
Medical bills
divorce
A sick dependent or spouce
A disabling injury

 

[heeyy_joe]

Why not a yacht?

jaws clip: "You're going to need a bigger boat" - YouTube

Add addiction to the list.

 

[martyp]

It made me sick to read that article.

 

[jclarksnakes]

If you are going to be stupid you have to be tough.

 

[timo2]

I guess if you lived on the boat, it might work out ePier - TURN YOUR TRAVEL TRAILER INTO A HOUSE BOAT - CHEAP!

Actually, It is a terrible thing that people let themselves be taken advantage of by shysters.

 

[ERD50]

I tried to list the reasons someone would do this. I can't imagine that someone would take a pension loan for a yacht or a vacation as some of the advertizing suggested. Here's what I came up with:

Poor health
Medical bills
divorce
A sick dependent or spouce
A disabling injury

Add " Hold instant gratification above all else" to that list. Ant/grasshopper.

-ERD50