The Best Retirement Strategies to Protect Your Wealth Through the Worst Economy Ever

First let’s look at where we’ve been in the past and then we’ll look to the future and get some strategies you can put in place to protect your assets for the future. If you are over 80, you are one of the few people who know what happened in detail when the great depression hit, even if you were a baby at the time, you must have heard stories from your mom and dad or relatives. .

The depression struck in 1929 when the entire US economy collapsed, causing many wealthy people and some not-so-rich people to end their lives because they had no protection. The key to survival is to have a fail-safe program that protects you from total failure. The difference between 1929 and today is that every aspect of today’s economic meltdown is global. Problems; there are hundreds of millions more people in the world than then. Most people today don’t realize or think that most of their wealth is in the biggest investment they’ve ever made and that is their home.

Yes, the house is and was for most people the biggest investment of their lives! The US home and equity that is untapped is estimated to be over $2 trillion; only for people 62 and older and growing faster than any other segment in the country today. This is true even though home values ​​across the country have been declining over the last 5 years or so.

You’ll see that most people don’t understand the fact that equity in your home doesn’t mean you’re rich unless you’re working for yourself to solve a problem. If you have $200,000 or more in your home or even much less, you are what is called House Rich and Cash Poor! Understand that having a home that is your own and owning it just means you have no payments, it doesn’t mean your equity can do anything for you unless you have cash to make things happen, it will increase your cash flow or sustain your life for many years without stress Herein lies the problem, you have what’s called a net worth of $200,000 or whatever, but if a situation arises in your life if you don’t have the cash to fix the problem, you still have net worth but you can’t spend it. to fix your problem or invest it to increase your wealth.

So now let’s look at some strategies!

Strategy #1

Increase your Income Tax Free

To maintain a standard of living, 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 income and annuitize it. The Retirement Security Foundation has traditionally wanted a three-legged stool made up of savings, pensions and Social Security.

Recent financial trends suggest that this conventional approach is becoming less effective. The saving rate among Americans has declined significantly since the 1980s, reaching its lowest level in 2004 since the Great Depression, although it has recently risen. Adding to these cash shortfalls is 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 nursing homes do not have enough resources to sustain them through their retirement years. Baby Boomers are also concerned about being able to maintain their standard of living as they age. Older workers who expect inadequate retirement income or a less reliable source of income, such as a defined benefit plan, are more likely to plan to use home equity to pay for retirement expenses.

option one

Increasing annualized monthly retirement income is deferring Social Security payments. Retirees receive a reduced monthly benefit at age 62 and progressively higher benefits for each month they postpone benefits until age 70. Elderly widows could see the greatest benefit, as the deferral would increase the expected value of their monthly survivor benefits. To maximize their monthly payments, as well as those of their spouses and other dependents, those nearing retirement may be able to continue working. However, this option can be difficult for workers in physically demanding occupations and those who are limited by health problems. To help life-long workers who must retire before age 70, some financial professionals recommend a term home equity loan or reverse mortgage to help pay living expenses for a few years until they are eligible for maximum Social Security benefits. .

option two

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

 option three

This option is the one that reduces stress and is also the safest option of the three, requires very little on your part, and is the easiest to accomplish. By using the equity in your home and not using available savings or another instrument, you can have the best of all worlds. Let’s look back a few decades and see what became available that had never been available before to many people, especially people 62 and older. As people age, they face an increasing possibility that a costly health problem could affect their family budgets. When they can’t make the monthly loan payments, they can lose their homes.

A recent study found that at the end of 2007, more than 684,000 homeowners age 50 and older were delinquent on their mortgage payments or in foreclosure. A reverse mortgage allows older homeowners to defer the monthly mortgage payments of a conventional home loan. Borrowers (or their heirs) do not have to repay the loan until the last borrower dies, moves permanently, or evicts for a period of 12 months. About 46% of reverse mortgage borrowers surveyed by organizations have paid off their regular mortgage this way. Some are transferring their existing home debt to meet the requirement that a reverse mortgage be in primary lien position. Anecdotal evidence suggests that a growing number of older homeowners are applying for this type of loan specifically to avoid the need to make monthly mortgage payments.

Using home equity to manage debt became popular after the Tax Reform Act of 1986 phased out the interest deduction on credit cards, car loans, and most other types of consumer debt. , while maintaining tax deductions for certain home loans. Since then, borrowers have shifted from installment plans to tax-advantaged mortgages and home equity loans to pay for major purchases like cars and appliances. Easy access to credit also provided lower-income households with greater liquidity to purchase the goods and services they need to continue living at home.

Using home wealth to manage consumer debt can improve a person’s standard of living. But if this resource is not used wisely, it can also be a source of financial insecurity. Senior homeowners often take on considerable debt without considering the potential impact of these loans on their long-term retirement security. Using a reverse mortgage to defer debt payments can also be risky. Borrowers who use loan proceeds early in retirement may have little home equity later in life. Borrowers continue to accrue interest payments on the loan balance for as long as they remain in their homes. Those who continue to live in their homes for many years may find that they have little or no home equity left after paying off the loan.

This could be problematic for older adults who need to move to an assisted living facility or other supportive setting as they become frail and need care. Without sufficient funds, some may have to turn to Medicaid to pay for long-term care.

Having a Reverse Mortgage and setting it up in a way that takes into account 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 option unlike any other anywhere. You control the amounts and timing and can change it as the situation changes. Besides; it gives you the freedom to decide what, when and how you can receive income or payments and, unlike most programs, depending on how you choose to receive, you can never outlive the money no matter what happens in the future. Also, you will never have to pay anything back in your life, it all happens when you are gone and no longer living in your home as your primary residence.

The reverse mortgage is so versatile in every way, from choosing how interest charges accrue over time, which means you pay an adjustable fixed rate. You can also choose how you’ll receive the money, whether it’s a one-time payment or over a specific period of time or for a lifetime. Not to mention, you can also make the amount set aside for the future grow over time. This option is the Embedded Home Equity Line of Credit! This part is only available when using the adjustable rate program, but it’s the one that really gives you the most flexibility for a real advantage against inflation.

Any financial expert worth a grain of salt must agree that in our later years we need the maximum amount of security along with maximum flexibility and that is what the Reverse Mortgage can and does for millions of seniors. So don’t look at the Reverse Mortgage as just another mortgage, see that it has the ultimate program that can do more to protect your future and give you what you need today at the same time, all you need is to set it up right out of the box. and then it adjusts as your own personal situation changes and there’s one thing you can count on to change your financial situation, there’s no question about it. It’s not IF it’s when.