Retirement for many people means having to worry about how you are going to live comfortably and pay your bills without working.
People are living longer today than the previous generations and as a result, need a much bigger portion of savings to see them through the unknown length of retirement.With demanding medical bills, inflation and various other expenses, retirement income needs to exceed the 20- year mark. Citizens age 85 or older are growing in numbers, 3000 Americans turned 100 in 1950, these figures will be closer to 1 million in 2050.The mindset needs to change and the country needs to gear up and plan for a 40-year retirement and not a 20-year retirement plan.
In the past, the financial services industry and the population, in general, have always taken the view that a Reverse Mortgage Loan is only for the destitute and desperate.
When these mortgage plans first made an appearance in the marketplace, they were regarded as the poor man’s aid and indigent pension plan and protection. Only the people with no other retirement option would use them.
This perception is starting to change drastically, and wealthier retiree’s and financial planners alike are starting to see the benefits of synergising this mortgage option with other financial tools.
There are approximately 10 000 people per day turning 65, over the next 15 years.Of these figures, 10-15 million of these are wealthy or have secured substantial income and savings for their retirement.They have a revenue stream and investments in their 401(k) or a rollover IRA, and their homes are almost paid off.
These are the retiree’s who are more than likely going to reap the most benefits from a Reverse Mortgage. This mortgage program is not affected by the market fluctuations and buoyancy that determine a 401(k) or IRA.Taking income out of these securities portfolios when they are down is detrimental to the capital amount of these portfolios. If the lower returns are experienced in the first retirement years, the capital amount may well be exhausted if drawn upon consistently.
It is a growing trend that the wealthier retirement group is now facilitating HECM loans. When the securities portfolios of the 401(k) and IRA’s declining you use this mortgage plan to keep your investment portfolio from declining. This action increases the chances of a sustainable income through an unknown number of retirement years.Wealthier couples are choosing this option at retirement age to have the available credit in their lifestyles.Financial planners are also starting to introduce the concept more often in their financial portfolios for retirees. The longer term value and cheaper costs associated with these programs are becoming more and more evident in this type of plan.
This mortgage for seniors is starting to be considered a viable, legitimate avenue for retirement planning.Brokers and lending institutions will definitely start seeing a rise in the demand for these mortgage programs.Senior Americans should have a broker assist in developing a financial plan combining all their assets and investments with a Reverse Mortgage included.
Take money from a line of credit when securities are plummeting when the securities portfolio starts to recover stop taking it out of your credit and resume drawing from your portfolio. A recent study found that this balancing act between the options increased the lifespan of the investment portfolio, in some cases by 90%.
The super wealthy will not benefit from this plan as they live far above what this mortgage can offer them.The maximum value that can be drawn from a home on this plan is $625 000.00
Currently with the stock market doing well, house prices are starting to increase after the downturn, people are trying not to touch their assets and rather looking to make their home’s equity work for them.These are the folks who live in a house probably worth $400 000.00 and they don’t owe anything on their homes, so they want that equity to work for them and supplement their incomes and lifestyles.
The financial planning market is starting to embrace this philosophy as are the wealthier retirement age couples.It is vitaly important to have a well endorsed financial planner to help you with your planning.Many mortgage brokers are only there to earn commisions and will not work out the optimum plan for your needs. Research your financial planners well, this is your future and your money that is on the table and being worked with.
Your financial planner must be approved by the FHA and offer HECM loans, this means that for your protection should a Lender have to declare bankruptcy, that you will be safe and your investments will be safe and supported by the federal government.
In most cases an FHA backed loan is the route to follow, the traditional loan market has dried up with the downturn from 2007.Make sure you know what to look for.