Tag Archives: Reverse Mortgage

Don’t Make Health Insurance Mistakes

Don’t Make Health Insurance Mistakes

If possible, you should try to keep your health insurance. Not understanding the requirements and rules of your plan leaves you at risk of inadvertently losing coverage upon retirement. Many mistakenly assume that Medicare will take care of all their health care needs when they turn 65-years-old, but it doesn’t. At that time, you’ll need a Medicare Advantage Plan or Medicap supplemental policy.

Smart Investing

Your financial advisor has most likely advised you to maintain a balanced portfolio of both bonds and mutual funds. This is because taxation and inflation can take large chunks out of your income and you need a portal for long-term growth.

Understand Your Retirement Funds

You should review your retirement fund options with your financial advisor, asking as many questions as you need to understand all the options and processes.

Work With A Fee-Only Financial Planner

It’s always best to work with a financial planner to understand all the complexities of financial planning, the various options available, and what might best accomplish your particular needs and goals. Make sure that your financial advisor is fee-only, meaning they are charging you a fee for their advice. The person advising you shouldn’t be someone that may have an alternative agenda, such as selling retirement products.

Postpone Social Security Benefits

It may be better for you to draw from your IRA or 401 (k) plan before applying for benefits through the Social Security Administration, as this could mean your Social Security benefits will be higher. Typically, someone that postpones drawing benefits from age sixty-two to age seventy will see an increase of around 76%.

Postpone Annuities

Annuitization should be postponed until you’re in your early eighties or late seventies. This means the fixed monthly payments won’t have to last as long and will be more apt to cover your financial needs.

Postpone Reverse Mortgages

A reverse mortgage is a viable option for those running out of money during their retirement years, but this should be something put off as long as possible.

Think Outside The Box

Some may fall short of their financial retirement goals before or during retirement. Desperate times call for desperate measures. It may be necessary to think about communal living. Depending on family dynamics, living with your children may be a viable option.

A Reality Check Concerning Long-Term Care

A Reality Check Concerning Long-Term Care

Despite all of the words written about longevity increasing the possibility of more people needing long-term care, there remain a number of myths surrounding the subject. The issue is so emotionally charged, that most people prefer to create their own reality about long-term care rather than face the truth. It is painful to admit that parents or other loved ones could someday have senile dementia, Alzheimer’s, or another debilitating disease that will change them from the person we know into someone vastly different.

In the event of a long-term care need, it’s important that the family stays focused on the emotional and physical needs of the person needing care. Having properly planned for this eventuality with insurance coverage allows them to do so. Many families assume that they will be able to handle the demands of long-term care on their own. What they don’t realize is that having the responsibility of being a caregiver has a major impact on your life. The demands often cause people to give up jobs in order to devote the necessary amount of time needed to provide care. It can also drive a wedge between family members if a spouse becomes an absentee parent because they are spending most of their time providing care for their own parent.

That’s why it is so important to have long-term care insurance to provide suitable care without placing undue stress on the family of the person requiring the care. While this makes sense in theory, many people are reluctant to purchase long-term care insurance because they believe certain fallacies about this type of coverage. The first is that you can pay for long-term care costs from your own assets. Many people believe that a reverse mortgage or stock portfolio can take the place of a policy. However, the cost of caring for an extended illness can easily wipe out one’s assets and bring a family to bankruptcy.

Many people also falsely believe that long-term care is only administered in nursing homes. In fact, the majority of people receive long-term care today in their own homes or community based facilities, not nursing homes. Depending on the policy, long-term care insurance can cover nursing home stays, home health care and community-based services.

When you are comparing policies, there are several factors to consider before making your decision:

·   The financial strength of the insurance company underwriting the policy.

·   The current cost of care in your area so that you can choose a daily benefit that will cover the needs of the person receiving the care.

·   The length of the benefit period. Since it is difficult to determine how long a person may require care, many people choose policies with lifetime benefits.

·   The number of days the policyholder will be responsible for paying out-of-pocket before coverage begins. This is known as the elimination or waiting period.

·   The inflation protection provided by the policy. This feature ensures that benefits provided by the policy will be adequate to cover future needs.

And finally, many people believe they can rely on Medicaid for long-term care. The policy changes to the Medicare program mandated by the Deficit Reduction Act of 2005 have made fewer people eligible to receive benefits. The safest course of action is not to wait and learn that your family member cannot qualify, but rather prepare for the future with a long-term care policy.

 

A Game Plan for Retirees in Debt

A Game Plan for Retirees in Debt

In recent years, financial experts have noticed a disturbing trend emerging in America: an increasing number of retirees are drowning in debt. As a matter of fact, credit card debt for people 65 and older has skyrocketed by 26 percent, according to a 2005 Demos study of low and middle-income households. These debt-weary 65-year-olds reported an average of $4,000 of credit card debt for medical expenses alone.

To top it off, Americans 55 and older have been the largest age group filing for bankruptcy in recent years, according to the AARP. This 55+ population accounted for 23 percent of the 1 million bankruptcy filings in 2007. Unfortunately, older seniors are even more likely to file. Bankruptcy has quadrupled for Americans ages 75 to 84.

Of course, much of this debt stems from the Great Recession. Some of these retirees made all the right financial moves, saving up and buying homes and maxing out their 401(k) and IRA contributions throughout their working years. But sadly, the stock market decline has whittled away at these retirees’ nest eggs, and the floundering real estate market has caused their home values to plummet.

Fortunately, there are options available for retirees who find themselves in this sticky financial situation. Here are some potential moves for retirees loaded down with debt:

Look into a reverse mortgage

If you’re a retiree in serious debt and you own a house or have significant equity, experts with the National Foundation for Credit Counseling say you should consider a reverse mortgage. A reverse mortgage is a special type of home loan that allows you to convert a portion of your home equity into cash. But unlike a traditional home equity loan or second mortgage, you are not required to repay until you no longer use the home as your principal residence.

HUD’s Federal Housing Administration (FHA) created The Home Equity Conversion Mortgage (HECM), one of the first reverse mortgage plans. The HECM is a safe plan that allows older Americans to withdraw equity from their home, which gives them greater financial security. Many seniors use these reverse mortgage funds to boost their retirement funds, pay for medical bills and pay off credit card debt.

Of course, there are many downsides to reverse mortgages-including high fees and relatively low credit lines. However, if you’re truly snowed under with debt, it may be your only choice. If you’re considering a reverse mortgage, it’s important to do your homework. Do some research on the topic and discuss the pros and cons with your financial advisor.

Get back to work

If you’re still healthy enough work, you should consider getting a post-retirement job to pay off that debt. An increasing number of American seniors are working well into their retirement years, taking on new jobs after their “official retirement. According to the U.S. Department of Labor, 6.4 percent of Americans age 75 or older (more than 1 million seniors) were still working in 2006. That was up from 4.7 percent just ten years earlier.

If a million other seniors can take on post-retirement jobs, so can you. There’s an abundance of jobs available for retirees, including temp work, customer service positions, store greeter jobs and consulting work.

Move out

If you’re stretched really financially thin, you may have no other choice but to sell your house (or get out of your rental lease) and move in with a family member. Ask your son or daughter if you can stay with them temporarily, at least until you can pay down your debts. Once you get back on your feet financially, you may be in a position to rent or buy a new place.

Do NOT dip into the IRA

Whatever you do, don’t tap into your retirement funds to pay off your credit card bills. You’ll need your IRA or 401(k) to last the rest of your lifetime, so the last thing you should do is drain that account. It would be much wiser to get a part-time job and use that income to pay off your debts.

Consider bankruptcy only as a last resort

While many believe that bankruptcy is a sort of “get out of jail free card, this is simply not true. Filing for bankruptcy not only negatively affects your credit for up to ten years, but many consumers who go bankrupt end up having to pay back at least a portion, if not all, of their debt.

Because bankruptcy can completely wreck your financial status, you should avoid it all costs. Only those who are so deep in debt that they have no chance of ever paying it off should consider bankruptcy.

Start saving and investing

It’s never too late to start saving and investing. If you go back to work, live beneath your means for a few years and start investing every extra dime, you could accumulate enough money to pay off your debts and live a comfortable retirement.