The best retirement strategies to protect your wealth through the worst economy ever

Let’s first take a look at where we’ve been in the past, and then we’ll look to the future and find some strategies you can implement to protect your wealth for the future. If you are over 80 years old you are one of the few people who know in detail what happened when the Great Depression hit, although if you were a baby then you must have heard stories from your mother and father or relatives .

The Depression came in 1929 when the entire US economy collapsed, causing many wealthy and some not-so-wealthy people to take their lives due to lack of protection. The key to survival is a fail-safe program that protects against catastrophic failure. The difference between 1929 and today is that every aspect of today’s economic collapse is global. The problems; There are hundreds of millions more people in the world than there were then. Most people today don’t know, nor do they believe, that most of their wealth is in the largest single investment they’ve ever made, and that’s their home.

Yes, for most people, owning a home is and was the largest single investment of their lives! The US home and unused equity is valued at well over $2 trillion; only for people over 62 and is now growing faster than any other segment in the country. This is true even though the values ​​of homes across the country have fallen in the last 5 or so years.

You see, most people don’t understand the fact that equity in your home doesn’t mean you’re wealthy unless it’s working to solve a problem for you. If you have $200,000 or more equity in your house, or even a lot less, then you are what they call House Rich and Cash Poor! Understand that owning your home and having the right to own it just means you have no payments. It doesn’t mean your equity can do anything for you unless you have cash to do things that will either increase your cash flow or keep your life stress-free for many years to come. Here’s the problem, you have what is called a net worth of $200,000 or whatever, but if a situation comes up in your life where you don’t have the money to fix the problem, you still have a net worth, but you do cannot spend it to fix your problem or invest it to grow your wealth.

Now let’s look at some strategies!

Strategy #1

Increase your income tax-free

To maintain living standards, some older homeowners are beginning to convert home equity into monthly income. This approach is a relatively new concept that has gained momentum with the development of reverse mortgages. Financial professionals are also beginning to explore different options for using home equity to increase and annuitize income. The Old Age Security Foundation has traditionally been compared to a three-legged stool made up of savings, pensions and Social Security.

Recent financial trends suggest this traditional approach is less effective. Americans’ savings rate has declined significantly since the 1980s, hitting its lowest level since the Great Depression in 2004, although recently it has been rising again. Add to this the decline in defined benefit plans, leaving many Americans facing a future with less guaranteed retirement income.

As the cost of living continues to rise, many older Americans are finding it difficult to make ends meet. Researchers estimate that nearly 78% of all older adult households do not have sufficient resources to survive their retirement years. Baby boomers are also worried about being able to maintain their standard of living in old age. Older workers who have insufficient retirement income or a less reliable source of income, such as a

option one

In order to increase monthly retirement income, Social Security payments must be deferred. Retirees receive a reduced monthly benefit at age 62 and progressively higher benefits for each month they defer benefits until age 70. Older widows might see the biggest benefit, as deferring would increase the expected value of their monthly survivor’s benefits. In order to maximize their monthly payments, as well as those of their spouses and other dependents, people could keep working nearing retirement. However, this option can be difficult for workers in physically demanding jobs and those limited by health conditions. To help workers who expect to live long and need to retire before age 70, some financial experts recommend a term home loan or reverse mortgage to cover day-to-day expenses for a few years until they’re eligible for maximum Social Security benefits.

option two

Another option for older homeowners to secure retirement income would be to purchase a “long-lived” annuity with their savings and tap into small amounts of home equity to fill financial gaps until they start receiving their retirement payments. Longevity annuities require less investment than an annuity because they typically don’t start paying out until after age 80 or 85. This approach could be appealing to older Americans who worry that buying an annuity will leave them little money for unexpected expenses or leave a legacy. Consumers should carefully consider the fees associated with longevity annuities as they can be expensive.

 option three

This option is one that reduces stress and is also the safest option of the three, requiring very little on your part and being the easiest to do. By using the equity in your home and not using any available savings or other instruments, you can have the best of all worlds. Let’s go back a few decades and see what has become available to many people, particularly seniors over 62, who have never been available before. As people age, they face an increasing likelihood that a costly health issue could impact their family budgets. If they cannot make their monthly loan payments, they could lose their homes.

A recent study found that by the end of 2007, more than 684,000 homeowners ages 50 and older were in arrears on mortgage payments or foreclosures. A reverse mortgage allows older homeowners to defer the monthly mortgage payments of a traditional home loan. Borrowers (or their heirs) do not have to repay the loan until the last borrower dies, permanently moves out, or vacates for a 12-month period. About 46% of reverse mortgage borrowers surveyed by organizations paid off their regular mortgage this way. Some transfer their existing home debt to satisfy the requirement that a reverse mortgage be in the position of primary lien. Anecdotal evidence suggests that more and more elderly homeowners are taking out this type of loan to avoid monthly mortgage payments.

Using equity to manage debt became popular after the Tax Reform Act of 1986 eliminated the deduction for interest on credit cards, auto loans, and most other types of consumer debt, while retaining tax deductions for certain home loans. Since then, borrowers have switched from installment plans to tax-deferred mortgages and home equity loans to pay for major purchases like cars and appliances. Easy access to credit also gave lower-income households more liquidity to purchase the goods and services they need to continue living at home.

Using real estate assets to manage consumer debt can improve a person’s standard of living. But if not used wisely, this resource can also be a source of financial insecurity. Older homeowners often take on significant debt without considering the potential impact of these loans on their long-term retirement savings. Using a reverse mortgage to defer debt payments can also be risky. Borrowers who use borrowed funds early in their retirement may find themselves short on home equity later in life. Borrowers continue to accumulate interest payments on the loan balance as long as they remain in their homes. Those who remain in their homes for many years may find that they have little or no equity left after the loan is repaid.

This could be a problem for older adults who need to move to an assisted living facility or other supportive facility when they become frail and in need of care. Without adequate funds, some may have to turn to Medicaid to pay for long-term care.

Having a reverse mortgage and setting it up to account for things that may or may not happen in the future is what a reverse mortgage is all about. The flexibility within the mortgage gives you the opportunity to be unlike anything else anywhere. You control the amounts and timing and can change it as the situation changes. Additionally; it gives you the freedom to choose what, when, and how you receive income or payments, and unlike most other programs, depending on how you choose to receive it, you can never live out the money, no matter what future happens. You also never have to pay anything back in your life, it all happens when you are gone and no longer live in your house as your primary residence.

Reverse Mortgage is so versatile in every way, from choosing how interest accumulates over time, meaning a fixed rate is floating. You can also choose how to get the money either all at once or over a period of time or for lifetime. Not to mention that you can also let the amount reserved for the future grow over time. This option is the built in equity line of credit! This part is only available if you’re using the adjustable rate program, but it’s the one that really gives you the most flexibility for a real edge against inflation.

Any financial professional worth a grain of salt would have to agree that in our final years we need the highest level of security coupled with the highest level of flexibility, and that’s what the reverse mortgage can and does do for millions of seniors. So don’t think of reverse mortgage as just another mortgage, see that it’s the ultimate program that can do more to protect your future while taking care of today. All it takes is to be set up correctly from the start and then adjusted as your personal situation changes and you can rest assured that your financial situation will change, there is no doubt about that. It’s not IF, it’s when.