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Monthly Archives: November 2013

Retirement Planning in the Age of Longevity

To the degree that people reach old age mentallysharp, physically fit, and financially secure, the problems of individual and societal aging fall away.”
— Laura L. Carstensen, Founding Director
Stanford Center on Longevity

reverse mortgage news

Amara Rose   November 19, 2013

According to a recent Stanford Study on planning for retirement at a time when we’re living longer than ever before, confidence in the ability to retire comfortably — or even to retire at all — is at a new low. Pitfalls include:

  • Failing to plan for retirement
  • Underestimating expenses
  • Underestimating the number of years they will be retired
  • Retiring too early
  • Failing to save

The biggest challenge is failing to plan for retirement at all, researchers say. Only a third of adults in their 50s have ever tried to devise a retirement plan…and only two-thirds of those who have tried have succeeded.

Even among those who do save, fear of limited resources tops the list of retirement concerns. According to a Bank of America Merrill Lynch 2013 Workplace Benefits Report, in a nationwide survey of more than 1000 employees from companies of all sizes:

  • 80% experienced an increase in health care costs in last two years (this may change under the Affordable Care Act)
  • 56% are saving less for retirement as a result
  • 85% feel they’re not saving enough
  • 60% believe it will be “very difficult” to ever save enough to support their standard of living once they retire
  • 79% would give up 5% or more of their salary if it meant having reliable income to help them live comfortably during their later years (38% would give up 10% of their salary — or more).

Though neither research report mentions reverse mortgage as a viable option for older adults once they reach retirement age, given the monetary concerns now facing those in late middle age or nearing retirement, this group appears to be a ripe market to consider the possibility, assuming someone owns a home with sufficient equity to qualify.

Yet continuing to earn isn’t the only reason for seniors to postpone retirement, says U.S. News & World Report, which suggests there are a number of good reasons to retire the idea of retirement for a while yet, such as:

  • Enjoying one’s job. While boss-bashing makes for humorous cartoons and water cooler conversation, people who love what they do need not retire just because they reach a certain age. Boomers, especially, are aging (and perceive aging) much differently than previous generations. A professional hair stylist, for example, is still booked months ahead because she takes time off to travel. At 67, she has no plans to retire anytime soon.
  • Improved health. Contrary to popular belief, working longer may actually enhance later life health: one study of nearly half a million French workers found that every additional year of work before retirement lowered the risk of dementia 3.2 percent.
  • Marital accord. Women have long maintained that once their husbands retire they’re underfoot all day and at loose ends, which can wreak havoc on a marriage. The longer at least one partner continues working, the better it may be for marital harmony. The extra income is a bonus.

By balancing data on the necessity of planning for retirement with the positives about continuing to work, you can present a more informed picture to potential reverse mortgage prospects to help them make the best possible decision for a secure future in the age of longevity.

About the author: Amara Rose View all posts by Amara Rose is a personal and business coach with a broad background in health and positive aging. She holds a social welfare degree with a gerontology emphasis from Penn State, and has written extensively about senior housing, elder health and nutrition, lifelong learning, and the spiritual dimension of aging. A seasoned marketing copywriter, Amara has wordsmithed everything from blogs to brochures to web content. Contact Amara at amara@liveyourlight.com to learn more.
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INFORMATION FOR ADULT CHILDREN OF AGING PARENTS

Following is some helpful information when you are considering an FHA HECM for your parents:

House-safe• More Americans fear running out of money in retirement than fear death. With increasing life expectancy, it is easy to understand this fear. Increasingly, long-term retirement planning includes a reverse mortgage as a means to increase cash flow and address income shortfalls in retirement. Nearly one quarter of homeowners say long-term financial planning was their reason for originating their HECM.

• Nearly half of homeowners considering a reverse mortgage are under age 70.

• About two-thirds of HECM borrowers want to extinguish monthly mortgage payments to make more money available for daily needs. Another way of saying this is that most homeowners have a traditional mortgage – which is paid in full when they close on their reverse mortgage.

• The percentage of workers aged 55 or older who are still employed is up to 40%. However, staying in the workforce can become increasingly difficult as people get older.  Proceeds from the HECM may provide provide tax-free funds and may allow older homeowners to retire

 

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