At the beginning of August, the Boston College’s Center for Retirement Research-sponsored Washington Conference discussed “Retirement Security in Changing Times.” During the conference, the value of reverse mortgages on retirement planning was also discussed, leading to some surprising findings, according to the National Reverse Mortgage Lenders Association.
Many Americans who want to retire are postponing solely due to the burden of their mortgage payments. A reverse mortgage can help retiring Americans pay off their mortgage. If the heaviest burden on your retirement is mortgage, a reverse mortgage allows you to live mortgage-free for the rest of retirement and leaves an extra source of cash flow that can be stored in a line of credit that grows yearly.
There is a cohort of people over 55 who planned their retirement, were saving, lost their jobs as a result of the recession, cannot find other work and thus are left with a cash gap in their retirement funding plans. The recession hit future retirees hard, even if they had planned their sources of retirement income. A reverse mortgage line of credit option is an non-cancellable source of income, unlike a home equity line of credit, which can be cancelledor reduced at any time. As long as there are funds in the account, the line of credit option cannot be frozen.
Some of those in the above situation are finding they are getting lower monthly Social Security benefits than they had anticipated because they had fewer years at their higher salaries than they expected. A reverse mortgage allows homeowners the ability to supplement their retirement with an extra source of cash flow. In addition, they are less likely to use up their savings and overuse their Social Security benefits with less than desirable consequences.
Some people in the situation above lost their health care benefits and cannot replace them and also pay their other monthly expenses. The reverse mortgage line of credit option allows consumer flexibility over when, and how much, of their funds are used at any given time. If an unexpected expense arises, homeowners have the freedom to withdrawal the funds needed to cover the expense.
Instead of borrowing against their homes, many people are using credit cards with high interest rates to pay their medical bills and thus multiplying the cost of their medical care over time. Racking up credit card debt, not only ensures that retirement will be less than relaxing, but can be detrimental to your overall financial health. The equity in your home is your investment, and it’s time to receive a return on you investment.
Financial advisors tend to focus on asset accumulation and income replacement, but of equal or even greater value can be debt elimination. Debt elimination allows you the piece of mind to enjoy retirement. If you have to work constantly, even during retirement, to cover your debts, it is not retirement. Many homeowners underestimate the value of getting rid of debt, don’t make the same mistake.
At PS Financial Services, a reverse mortgage company in Florida, we specialize in reverse mortgages, offering our clients service they can count on. If you think a reverse mortgage is right for you or have any questions, give us a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we’re simply here to help.
Click here for more information about the elimination of the reverse mortgage program as we know it: