Most boomers are taking steps to manage their spending and secure their nest egg. However, according to a recent study from the Bankers Life Center for a Secure Retirement, this may not be enough. In the years that followed the Great Recession, millions of middle-income Americans suffered severe financial setbacks. The Bankers Life study reported that between 2007 and 2010:1
According to a recent CBS News article, the loss in home value is particularly concerning because most middle-income Americans have the same or more wealth in the form of home equity than they do in financial assets. In fact, the article says that one in four boomers doesn’t currently invest.1
Furthermore, the Bankers Life study found that two thirds of boomers are concerned about another financial crisis occurring within their lifetime, and rightfully so. The U.S. has suffered four major meltdowns over the last thirty years: one in the late 80’s, early 90’s, early 2000 and the Great Recession. Since it’s likely that boomers will live another twenty to thirty years, there’s a good chance they’ll see another financial crisis in their lifetime. As a result, the article states that many boomers are taking steps to prepare now and improve their financial situation. For example:1
According to the Bankers Life study, many retirees are reducing their spending in an effort to better manage their finances, for example:1
The article states that “Almost four in 10 middle-income boomers expect to rely on Social Security for their primary source of retirement income. This percentage is up significantly from before the Great Recession, when fewer than one in three felt that way.” Unfortunately, social security was not designed to be the primary source of retirement income, but rather a safety net. Therefore, boomers that expect to rely on social security may want to delay collecting benefits until age 70. This strategy will allow them to collect their maximum benefit amount, as well as protect surviving spouses.1
Another option for boomers to consider is accessing their equity through a reverse mortgage. This is an especially good option for those that are house rich, but cash poor. A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a Federal Housing Administration insured loan. A HECM enables seniors age 62 and older to access a portion of their home’s equity to obtain tax free2 funds without having to make monthly mortgage payments.3
If you’re coming up short on retirement funds, and would like to learn how a reverse mortgage could help, please use our Reverse Mortgage Calculator or call us at 800-218-1415.
1 How Boomers Are Adjusting to Prospects of a Frugal Retirement – cbsnews.com, by Steve Vernon, 4/18/17, http://www.cbsnews.com/news/how-boomers-are-adjusting-to-prospects-of-a-frugal-retirement/?&tc=eml.
2 Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.
3 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.