| First let's look at where we have been in the past and | | | | immediate annuity will leave them little cash to pay for |
| then we will look into the future and get some | | | | unexpected expenses or to leave a bequest. |
| strategies that you can implement to protect your | | | | Consumers should carefully examine the fees |
| assets for the future. If you are over the age of 80 | | | | associated with longevity annuities, since they can be |
| you are one of the few people that know what | | | | expensive. |
| happen in detail when the great depression hit even | | | | Option Three |
| though you would have been a baby at the time, you | | | | This option is one that reduces stress and also is the |
| must have heard stories from your mom and dad or | | | | safest option of the three, it requires very little on your |
| relatives. | | | | part and is the easiest to accomplish. By utilizing the |
| The depression hit in 1929 when the entire US | | | | equity in your home and not using available saving or |
| economy clasped, which cause many wealthy people | | | | other instrument you can have the best of all worlds. |
| and some not so wealthy people to end their lives | | | | Let's look back a few decades and see what |
| because they did not have protection in place. The key | | | | became available that had never been available |
| to surviving is having a fail safe program in place that | | | | before for many people especially seniors over the |
| will protect from total failure. The difference from 1929 | | | | age of 62. As they age, people face a growing |
| and today is that every aspect of today's economic | | | | possibility that a costly health problem could disrupt |
| melt down is it is worldwide. The issues; there are | | | | their family budgets. When they cannot make their |
| hundreds of millions of more people in the world then | | | | monthly loan payments, they may lose their houses. |
| there was then. Most people today do not realize nor | | | | A recent study found that by the end of 2007, more |
| do they think that most of their wealth is in the single | | | | than 684,000 homeowners age 50 and older were |
| largest investment that they ever made and that is | | | | delinquent in mortgage payments or in foreclosure. A |
| their home. | | | | reverse mortgage allows older homeowners to defer |
| Yes the home is and was for most people the single | | | | monthly mortgage payments on a conventional home |
| largest investment of their life! The home in the US and | | | | loan. Borrowers (or their heirs) do not have to repay |
| the equity that is just sitting around untapped is | | | | the loan until the last borrower dies, permanently |
| estimate at well over 2 Trillion dollars; just for people | | | | moves out, or vacates for a period of 12 months. |
| over the age of 62 and growing faster than any other | | | | About 46% of reverse mortgage borrowers surveyed |
| segment in the country today. This is true even though | | | | by orgainizations have paid off their regular mortgage |
| the values of homes around the country have been | | | | in this way. Some are transferring their existing housing |
| declining over the last 5 or so years. | | | | debt to meet the requirement that a reverse |
| You see most people do not understand that fact that | | | | mortgage be in primary lien position. Anecdotal |
| equity in your home does not mean you are wealthy | | | | evidence suggests that growing numbers of older |
| unless it is working for you to solve a problem for you. | | | | homeowners are taking out this type of loan |
| If you have $200,000 or more equity in your home or | | | | specifically to avoid the need to make monthly |
| even a lot less you are what is called House Rich and | | | | mortgage payments. |
| Cash Poor! Understand that having a home that is | | | | Using home equity to manage debt became popular |
| yours and owning out right just means you have no | | | | after the Tax Reform Act of 1986 phased out the |
| payments it does not mean that your equity can do | | | | deduction for interest on credit cards, auto loans, and |
| anything for you unless you have cash to make things | | | | most other types of consumer debt while preserving |
| happen to will either grow your cash flow or maintain | | | | tax deductions for certain home loans. Since then, |
| your life for many years without stress. Here lies the | | | | borrowers have shifted from installment plans to |
| problem, you have what is called a net worth of | | | | tax-advantaged mortgages and home-equity loans to |
| $200,000 or what ever, but if a situation in your life | | | | pay for major purchases such as cars and appliances. |
| appears if you don't have the cash to fix the problem | | | | Easy access to credit also provided lower-income |
| you still have a net worth but you cannot spend it to | | | | households with greater liquidity to purchase the goods |
| fix your problem or invest it to increase your wealth. | | | | and services that they need to continue to live at |
| So now let's look at some strategies! | | | | home. |
| Strategy # 1 | | | | Using housing wealth to manage consumer debt can |
| Increasing your Income Tax Free | | | | enhance a person's standard of living. But if this |
| To maintain a standard of living, some older | | | | resource is not used wisely, it can also be a source of |
| homeowners are starting to convert home equity to | | | | financial insecurity. Older homeowners often take on |
| monthly income. This approach is a relatively new | | | | sizable debt without considering the potential impact of |
| concept that has gained momentum with the | | | | these loans on their long-term retirement security. Using |
| development of reverse mortgages. Financial | | | | a reverse mortgage to defer debt payments can also |
| professionals are also beginning to explore different | | | | be risky. Borrowers who use loan funds early in their |
| options for using home equity to increase and | | | | retirement may have little home equity later in life. |
| annuitized income. The foundation for retirement | | | | Borrowers continue to accumulate interest payments |
| security has traditionally likened to a three-legged stool | | | | on the loan balance as long as they stay in their |
| consisting of savings, pensions, and Social Security. | | | | homes. Those who continue to live in their homes for |
| Recent financial trends suggest that this conventional | | | | many years may find that they have little or no home |
| approach is becoming less effective. The savings rate | | | | equity left after they repay the loan. |
| among Americans has declined significantly since the | | | | This could be problematic for older adults who need to |
| 1980s-reaching its lowest level in 2004 since the Great | | | | move to an assisted living facility or other supportive |
| Depression-although it recently turned upward. | | | | setting as they become frail and in need of care. |
| Compounding these cash shortfalls is the decline of | | | | Without sufficient funds, some may need to turn to |
| defined benefit plans, which leaves many Americans | | | | Medicaid to pay for long-term care. |
| facing a future with less guaranteed retirement income. | | | | Having Reverse Mortgage in place and setting it up I a |
| As the cost of living continues to rise, many older | | | | way that takes into consideration of things that may or |
| Americans find it hard to make ends meet. | | | | may not take place in the future is what a Reverse |
| Researchers estimate that nearly 78% of all older | | | | Mortgage is all about. The flexibility within the mortgage |
| adult households do not have sufficient resources to | | | | affords you the option unlike anything else anywhere. |
| sustain them through their retirement years. Baby | | | | You control the amounts and timing and you can |
| Boomers are also concerned about being able to | | | | change it as situation change. In addition; it gives you |
| maintain their standard of living as they grow older. | | | | the freedom to decide what, when and how you can |
| Older workers who expect inadequate retirement | | | | receive income or payments and unlike most of |
| income, or a less reliable source of income, such as a | | | | programs depending on how you choose to receive |
| defined benefit plan, are more likely to plan to use | | | | you can never out live the money no matter what |
| home equity to pay for retirement expenses. | | | | happens in the future. You will also never in your |
| Option One | | | | lifetime have to pay anything back it all happens when |
| To increase monthly annuitized retirement income is to | | | | you are gone and no longer live in your home as your |
| defer Social Security payments. Retirees receive a | | | | primary residence. |
| reduced monthly benefit at age 62 and progressively | | | | The Reverse Mortgage is so versatile in everyway |
| larger benefits for each month they postpone benefits | | | | from choosing how interest charges accumulate over |
| up to age 70. Elderly widows could see the greatest | | | | time meaning a fixed rate verses adjustable. You can |
| benefit, since deferral would increase the expected | | | | also choose how you will receive the money either all |
| value of their monthly survivor benefits. To maximize | | | | at one time or over a specific time period or for life. |
| their monthly payments, as well as that of their | | | | Not to mention you can also have the amount that is |
| spouses and other dependents, people near retirement | | | | set aside for the future grows over time. This option is |
| could continue working. However, this option may be | | | | the built in Equity Credit Line! This part is only available |
| difficult for workers in physically demanding | | | | when using the adjustable rate program, but it is the |
| occupations, and those who are limited by health | | | | one that really gives you the most flexibility for a real |
| problems. To help workers who anticipate a long life, | | | | edge against inflation. |
| and who must retire before age 70, some financial | | | | Any financial expert who is worth a grain of salt has |
| professionals are recommending a term home-equity | | | | to agree that in our latter years we need the |
| loan or reverse mortgage to help pay for everyday | | | | maximum amount of security coupled with the |
| expenses for a few years until they are eligible for | | | | maximum amount of flexibility and that is what the |
| maximum Social Security benefits. | | | | Reverse Mortgage can and does for millions of |
| Option Two | | | | seniors. So don't look at the Reverse Mortgage as just |
| Another option for older homeowners to ensure | | | | another mortgage, look at it has the ultimate program |
| retirement income would be to buy a "longevity" | | | | that can do more things to protect your future and |
| annuity with their savings, and tap small amounts of | | | | provide for today at the same time all it needs is to be |
| home equity to fill financial gaps until they start to | | | | setup properly from the on set and then adjusted as |
| receive their annuity payments. Longevity annuities | | | | your own personal situation changes and there is one |
| require a smaller investment than an immediate annuity | | | | the thing that you can count on it that your financial |
| because they usually do not begin payouts until after | | | | situation will change the is no doubt about this. It is not |
| age 80 or 85. This approach could be attractive to | | | | IF it is when. |
| older americans who worry that purchasing an | | | | |