Two assets are typically ignored in retirement financial planning. One is Social Security claiming, that is the most advantageous way to structure Social Security benefit payouts. The other is…
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It’s not a mistake that the age of eligibility for the federally-insured reverse mortgage is 62. Americans in their sixties begin to seriously consider the merits of continued full-time work against the rewards of a more leisurely lifestyle. Here are five factors each pre-retiree is likely to contemplate before bidding farewell to report to work each day.
First is their retirement readiness. One facet that’s typically ignored in favor of crunching numbers is psychological preparedness. Newly retired individuals can begin with feelings of excitement and anticipation only to fall into a morass of depression, anxiety, and restlessness. Aging expert and author Sources of Income/Cashflow says, “people spend more time planning a wedding than planning retirement. It’s very important to think about your identity and what you’re losing, and how you get a new identity. What would give you a sense of meaning and purpose?” Next is financial readiness which is typically determined by creating a post-employment budget. This will include reliable sources of monthly income throughout their retirement years. The good news is their expenses may be considerably less when factoring in they’re no longer raising children or incurring ongoing costs related to employment such as transportation.
The reverse mortgage market got some new respect earlier this year. When it looked like…
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It’s easy to cast stones but to be fair retirement planning while common is perhaps one of the most challenging services provided by financial professionals. Here’s what two experts have to say…
While more financial professionals are embracing the HECM, ironically our cousins across the pond seem to better grasp the concept of home equity management and its role in funding retirement. Is today’s choice of retirement investment vehicles adequate to meet the needs of today’s savers and retirees? Can asset management live up to it’s name without including a retiree’s largest tangible investment?
Hedgeweek is a blog for hedge fund managers and institutional investors…the big players. Moving in the deep waters of asset management, their recent post recognizes challenges similar to those faced by American retirees seeking to fund retirement. Beyond a lack of saving, individual investors are stymied with a choice of investment products that may not meet their needs.
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If you were to eavesdrop on a typical meeting with someone in their 50’s with their financial advisor, chances are you would here the sensible advice to purchase long term care insurance. This practical recommendation is rooted in the fact that nearly 70% of those aged 65 and older will need long term care services at some point in their lifetime. However skyrocketing long term care premiums has one financial planner recommending alternatives.
George Gagliardi is a certified financial planner focused on creative solutions to help preserve and grow his clients’ assets. A recent MarketWatch article shows that Gagliardi is skeptical of traditional retirement advice when it comes to protecting his client’s assets from the ravages of health emergencies and long-term care costs. Long term care costs are not the only threat, the other is the risk of exploding premium rates. Federal employees participating in the long-term care insurance program learned this harsh lesson in 2016 when their premiums jumped 126%. Two choices were offered- pay the higher premium and retain your current coverage or pay the same premium for less coverage. A spike in premiums had a direct impact on a senior’s cash flow and quality of life.
Few financial planners stray from conventional recommendations and approaches to asset management and preservation. Unfortunately, conventional wisdom yields typical results. Gagliardi takes a different approach favoring two alternatives: hybrid long term care policies and the Home Equity Conversion Mortgage.
Creativity unlocks potential markets and opens up possibilities. It also makes you a target of critics. In recent years the long overlooked principal limit growth factor (or as many refer to it as the line of credit growth rate) has garnered a second look by financial professionals and our industry as a potential means of managing risk in a retirement portfolio.
“The use of reverse mortgages to hedge investment portfolios is a perversion of the original intent of the HECM Program, a misuse of FHA insurance, and puts the FHA insurance fund,” wrote AARP in a recent post. “HUD should take steps to ensure that homeowners who need money have access to HECMs, but should prohibit the use of HECMs for portfolio hedging.”
A perversion of the HECM program’s original intent? We have revisited the Home Equity Conversion Mortgage’s intent citing the language in which the program was created. Nowhere does it mention…
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Everybody talks about being retired, but less common is the in-between period when you may no longer be working full-time, yet are not what you might consider “senior” (especially as this definition keeps getting revised upwards!). How can you help the reverse mortgage clients and prospects you serve (and perhaps their Boomer children) to ease the transition into retirement?
Life shifts can be tricky to navigate, at every stage. I remember thinking, a few weeks after starting my first professional job, “Is this all there is?” I was surprised that I felt like a fish out of water, since I’d worked since age 15. But this felt like the true end of childhood, and all I could think was, “Do I have 40 more years of 8 to 5 to look forward to?”
Re-tire Your Career Wheels and Tread A New Path
At the other end of the career spectrum, similar feelings may arise. No matter how illustrious one’s career — in fact, the more notable someone’s career path, the more challenging retiring may appear — at some point, most people will surrender this role for the mantle of retiree. It’s only the exceptional who are still teaching, inventing worthwhile products, or practicing medicine well into their eighties and nineties, though this number is also likely to increase along with healthy longevity.
Some of the best retirement wisdom comes from those who’ve been there. Ninety-year-old author and former war correspondent Roy Rowan writes, in Never Too Late: “Living happily without your old job title can be made easier by re-tiring the wheels of your career, so to speak, and driving off in a new direction.”
And this 86-year-old counsels retirees (or anyone in the second half) to ask themselves the one question that will change your life.
Here are eight practical suggestions to help your reverse mortgage clients — and the younger generation — prepare to transition into retirement:
1. Volunteer! From libraries, schools, and animal shelters to digital creativity (blogs, webinars, social media…), there are myriad ways to share your wisdom and support, online and in the physical world.
2. Launch a flexible, part-time gig from home, such as a neighborhood dog walking service.
3. Create a daily/weekly structure to stay healthy and engaged, including such staples as exercise, journaling/meditating or similar, and social activities.
4. Develop a daily check-in with a friend who is also about to retire, or one who has already retired and can support your transition.
5. Enroll in a lifelong learning course through such schools as the Osher Lifelong Learning Institute (OLLI) part of UC Berkeley, or the Fromm Institute for Lifelong Learning at the University of San Francisco.
6. Explore The Transition Network, a national resource for women 50+.
7. Join or start a Meetup group that fits your interests, whether that’s dance or dream interpretation, hiking or Ham radio.
8. Become digitally literate. Now that you have the time, you might be amazed by what you can do on your laptop or smartphone. Resources such as New York’s Senior Planet Exploration Center call it “aging with attitude”!
Finally, maintain (or develop) your sense of humor most of all. While few of the chronologically gifted might wish to star in these movies, some of the titles are an lol (laugh out loud).
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Since the housing and economic crash of 2008 our industry has had its collective eye focused on the horizon seeking for signs of a significant rebound in reverse mortgage volume. Despite earlier predictions we have come to realize that the growth of the Home Equity Conversion Mortgage will be slow and steady. With this realistic view in mind more lenders and brokers are seeing the value in partnering with financial professionals.
While the return to annual HECM endorsement volumes exceeding 100,000 units may be some years away future growth may be fueled by increasing acceptance by the financial planning community. Several factors have contributed to the increasing acceptance of the reverse mortgage in the media and by financial professionals alike: consumer safeguards, reduced costs, the rediscovery of the HECM line of credit and recent studies illustrating the benefits of incorporating the loan into modern retirement planning. The tide has begun to turn when it comes to the acceptance of a long misunderstood and maligned loan.
“There are several signs in the air that the world is starting to get a little different,” said Tom Davison
Download a transcript of this episode here.
Looking for more reverse mortgage news, commentary and technology? Visit ReverseFocus.com today.
Last month we examined when retirement makes sense in terms of competency. But what if your reverse mortgage prospect(s) are perfectly competent, yet one half of the couple is planning to retire while the other wants to keep working?
A Cornell University study found that although the transition to retirement is stressful on marriages in general, the conflict is greatest when only one partner retires — and when men retire before their wives, they can often spiral into depression. (Note: While this study focused on heterosexual unions, the following guidance can apply across the spectrum of domestic partner arrangements.)
Couples therapist Harriet Pappenheim recommends couples create a vision of their ideal retirement. Each partner should ask themselves:
“So many couples head into an out-of-sync retirement without having even considered, much less discussed, what the retired partner will bring to the relationship now that the dynamics have changed,” says Pappenheim. This can create resentment for the working spouse unless you discuss the upcoming retirement and possible shifts in household responsibilities in advance.
Another option many almost-retireds tend to overlook is how they can repurpose and recycle their expertise for the second act. In the age of content curation, where using what already exists is considered as viable as starting from scratch, the decades of experience under someone’s belt could morph into the ideal retirement job. Consider whether you (or a reverse mortgage client or prospect who desires to keep working) can:
There are a number of ways to work from home that don’t require a large expenditure to launch, such as pet sitting or blogging. Such ventures can be especially rewarding if income takes second place to doing something different and enjoyable.
Finally, re-evaluate what “retirement” looks like to you. This 100-year-old educator has been professionally retired for a while, but remains “a walking history and a role model for our students,” according to her school superintendent. “She’s always recommending good books for me and others to read at the library, where she still serves as a board member.” That’s a profile of someone who may be formally retired, but is still filled with purpose and passion for sharing her gifts with the world.
For more reverse mortgage information, tools and technology visit ReverseFocus.com today.
