#5) The Three Biggest Challenges Boomers Face In Retirement

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By Matt Allen

The information provided in this article is intended to give a general overview of the topic and is not intended as legal advice. For information specific to your situation, please talk with your reverse loan mortgage professional.

Article #5, The Three Biggest Challenges Boomers Face In Retirement

There are three distinct challenges boomers are facing in retirement. They are living longer, they are more in debt and they have not saved enough. According to a survey from 2010 conducted by Allianz Life Insurance, 61% of boomers fear outliving their money in retirement more than they fear death.  The good news for boomer homeowners that are sixty two or better is their option to increase monthly cash flow and increase the longevity of their retirement funds with a reverse mortgage.

Based on my personal experience, boomers wait until they have no other options other than a reverse mortgage to begin the process of educating themselves about this loan. The majority of boomers I work with come to me when they have exhausted their retirement, have lost income, usually due to the loss of a spouse or their mortgage or debt levels have become unmanageable. Those are the reasons why a reverse mortgage is often referred to as a loan of last resort.

The reality is that the reverse mortgage can be a very powerful tool in a boomers financial plan. There are a variety of ways that it could be used and implemented that can have a massively positive impact on a boomers retirement, when implemented early on in retirement, instead of waiting until you need it. Here are a few of these options.

Supplementing retirement income using the tenure option can be an excellent option.  With the tenure option, you receive monthly payments for as long as you live in the home. These monthly payments could be used to add to what you are receiving from your investment accounts. Or they could be used to reduce the amount of funds you need to withdraw from retirement accounts, which could prolong the availability of retirement assets.

You could delay claiming social security through the use of the tenure, term or line of credit options of the reverse mortgage. By waiting to claim social security until you are age 70, you could increase your monthly social security payments by as much as 76%.

Get a reverse mortgage early and use it late in retirement. What many people are unaware of is that the line of credit grows in value. It grows at the current interest rate plus 1.25%. By getting reverse mortgage early on and letting the line of credit grow, you could have a tremendous asset later on in your retirement that could be cashed out or converted into significant monthly payments.

Boomers can often hemorrhage money early on in retirement trying to get car loans, credit cards and their mortgage paid off. Using retirement funds early on in retirement to pay off these debts can have a drastic impact on the growth and availability of retirement assets. Using a reverse mortgage to pay off these debts not only frees up monthly cash flow, but it can also reduce the amount of retirement funds needed to either make the monthly payments or pay off these debts.

Take the time now to start educating yourself about reverse mortgages and how they work. Do not wait until you need one. Planning your retirement with a reverse mortgage now can help you be better prepared for living longer, dealing with debt and finding additional sources of cash flow and retirement assets.

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