When Social Security Isn’t Enough

j0422392.jpgIt seems like every time I turn around, whether it be an advertisement, or simply a conversation with friends, I am reminded to develop a savings plan and stick to it! Whether it be saving for retirement, or saving for an inevitable event, we live at a time where the future is more and more unpredictable. With the instability of the world and the ever increasing cost of living, it is prudent to plan for the future, wherever life takes us. 

As a Certified Senior Advisor, I meet with many seniors who grew up in an age where planning for retirement was more or less having a pension and supplementing their retirement with social security income (or vise versa). In the day, one of the common worries was “Am I going to live long enough to enjoy my retirement.” Today, the common concern is “Will I have enough money to live throughout my retirement.” Or, stated another way, “Will I live too long?” Not simply just to survive, but to live in an independent way to enjoy life. When the savings runs dry, what are some strategies supplement social security to keep up with all of the demands of growing older? 

When evaluating financial products that can help to supplement income, most financial advisors will look for investment products that can provide a guaranteed “rest of life” income. For many seniors, this works well, and financial advisors have a myriad of products to help accomplish this goal. However, in order to take advantage of these programs, one has to have a lump sum of money to invest. Unfortunately, not everybody has the $50,000 to $100,000, or more, to invest. So, what else is available in order to supplement income and/or provide an emergency fund for unexpected events? 

As a Reverse Mortgage Specialist, I have worked with many seniors that are in the situation described above. The life savings has been spent and the quality of life has become a struggle trying to find peace in the midst of life’s financial storms. Though reverse mortgages have been around for many years, they are beginning to catch on as a viable financial product and provide the “peace-of-mind” for many seniors.  So, what is a Reverse Mortgage? In short, it allows senior homeowner’s 62 years old or older to use their home equity as an income source. Some of the main benefits of a reverse mortgage are:  

  • You retain full ownership in your home (Title does not change) 
  • No monthly payments
  • Can provide ongoing lifetime income.
  • Money received is tax-free
  • No financial requirements to qualify.
  • Does not affect Social Security or Medicare. 
  • No restriction on use of funds available.
  • You may continue to live in your home for the rest of your life.
  • Can receive the money in a variety of ways (i.e. lump sum, LOC, income)
  • You will never owe more than your house is worth.
  • Remaining equity will go to your heirs.

There are a variety of reverse mortgage products available. Each one is a little different, so it is very important to communicate to your advisor what your ultimate goal is in getting a reverse mortgage. Secondly, there are strategies one can use in order to preserve a portion of your equity, if that is a concern. Most importantly, however, is to learn about reverse mortgages as a part of a complete retirement plan. Though one may never need it, it is a great solution for many who find that their monthly cash flow is falling short.

Always feel free to contact me if you have any questions about reverse mortgages. You can contact me at greg.gulliford@pmrmtg.com or toll free at 1-888-480-6636.

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