There are more than 40 Million people who are 65 years old or older living in the United States today1, and many are just not financially prepared for retirement. The United States Census Bureau reports that in 2010, the median annual income for households ages 65 and older was $31,408 while the median income for all households was nearly $50,000.1 The scary truth is that fewer seniors today have sufficient retirement savings or company pensions than retiring seniors did just a generation ago, but have increasing expenses.2
As expected, health care is a substantial cost for many seniors. Health care is the second largest cost for seniors ages 75 and older.2 Health care expenditures include out-of-pocket costs for doctor visits, prescriptions, lab tests, medical equipment, over the counter medications, and supplemental insurance programs. For 65 to 74 year olds, the cost of supplemental health insurance almost doubled since 1990 and the cost makes up nearly two thirds of their health care expenses.2
Today, more seniors are also carrying debt into retirement. Credit card debt is soaring among the senior population. In 1989, the average credit card balance for people ages 65 to 74 was $2,100. In 2010, the average balance was $6,000. For those ages 75 and older, the amount of debt was not even measureable in 1989, but in 2010 the average had grown to $4,600.2
According to the Survey of Consumer Finances, the percentage of 65 to 74 year olds who report having a mortgage or a home equity loan payment increased from 21 percent in 1989 to nearly 37 percent in 2010. For seniors over 74, the percentage of those reporting a mortgage or home equity loan payment increased from 6 percent to 21 percent during the same time period.2
In addition to having a mortgage or home equity loan payment, the amount seniors spend on interest has also increased. This is troubling because interest rates have generally fallen so seniors are taking on more principal mortgage debt for longer periods of time and accruing interest well into their retirement years. Housing expenses, including mortgage interest, maintenance, taxes and insurance make up the largest expenditure seniors have.2
If you or someone you know is struggling to make ends meet each month and is at least 62 years old, there may be other financial options to help bring about financial security. A Federal Housing Administration insured reverse mortgage loan, or Home Equity Conversion Mortgage (HECM) loan, is only available to homeowners ages 62 and older who have sufficient equity in their homes. A HECM loan allows homeowners to access a portion of the equity they have built up in their homes as a way to help supplement their retirement income. The borrower still owns the home and must continue to pay property taxes, insurance and other required fees, as well as continue to maintain the home. For many senior homeowners, a HECM loan is a financial option that helps them to live more comfortably throughout retirement. If you are interested in learning more, call a reverse mortgage advisor at 800.976.6211 or use our reverse mortgage calculator to see how much you may qualify for.