Baby Boomers are Approaching Retirement
Are The Ready?
The baby-boom generation will reach retirement age over the next two decades. This will be the largest group of retirees in US history. With this large group nearing retirement, funding for retirement and financial options are evolving and becoming increasingly important.
In addition seniors are living longer resulting in longer retirement. A person who reaches age 65 can expect to live, on the average, another 18 years. Many will live longer. In turn, it is said that assets will need to last in average of 20 to 30 years longer.
Unfortunately the average personal savings rate is not keeping up with these demographic changes. The personal savings rate was 1% in 2006, reaching historical low since the Great Depression. Insufficient savings will mean that retirees will need to consider other sources of income, including working in retirement, or tapping into home equity.
For many seniors, the home is a largest financial asset. For households with at least one member age 65 or older who own their own home, have equity values averaged nearly 80% of the net worth. Many retirees want to continue living in their home during their Golden years. A helpful option available to seniors is a reverse mortgage.
A reverse mortgage is a loan that enables senior homeowners, age 62 or older, to convert part of their home equity in two tax-free income without having to sell their home, give up title, or make required monthly mortgage payments. A borrower may receive their funds in a lump sum, in monthly increments, as a credit line, or any combination of these options. The loan becomes due when the last borrower permanently leaves the home. Best of all borrowers will never under any circumstances resulting from the reverse mortgage be forced to leave their homes providing they make their real estate property taxes and insurance payments and maintain the home in reasonable condition. In addition, the repayment amount cannot exceed the current market value of the home at the time the loan matures.
Many seniors have found this to be an effective solution to fund or supplement their retirement years. With the growing generations among us, the option of the reverse mortgage has proved to be beneficial to seniors and are changing society.
Jim Saeger is a reverse mortgage specialist.
For more information please contact Jim at 727 596 9095 or
EMAIL Jimsaeger@myFloridareverse.com
SOURCE: Prudential’s Four Pillars of Retirement Series: The Fourth Pillar: Retirement Choices April 2007
*Consult your financial adviser. **Not all products available in all states.
