Retirement is a time to look forward to, to travel, to spend time with grandchildren and to enjoy well-deserved time off from working. Many seniors are able to enjoy their golden years in this fashion, but many more are concerned about finances and making ends meet throughout their retirement.
Nancy Folbre, Economics Professor at the University of Massachusetts, says, “…In the last six years, most Americans have gained a new appreciation of financial bad weather and the threat of a perfect storm. Stock market volatility, low interest rates and a sagging bond market have discouraged retirement savings”. Whatever the reason, those entering retirement often do not have enough to maintain their current lifestyle through retirement. “Among those 55 to 64 years old, two-thirds of working households with at least one earner have retirement savings less than one year’s income, far below what they will need to maintain their standard of living in retirement. By a variety of measures, most households, even those with defined benefit pensions, are falling far short of the savings they will need.”
A great concern for retirees and those planning on retiring in the near future is that they will outlive their retirement savings. Planning for retirement is not always easy. Below are some examples of retirement planning mistakes to avoid:
Underestimating life expectancy– The average life expectancy in America in 2013 is just over 78 years old. The Society of Actuaries “found that more than half of Americans underestimate their life expectancy, and that their financial planning time horizons are too short.”
Not saving enough money– “For people 10 years away from retirement, the median savings is $12,000.”
Mis-managing debt–According to Fidelity Investments, nearly half of all baby-boomers expect to retire with at least some debt. “People 55 and older accounted for 28.6% of bankruptcy filers in 2011, up from 22.9% in 2008, reported by the Institute for Financial Literacy.”
Not planning for health crisis– Nearly 8 in 10 seniors are living with at least one chronic health condition and a whopping 50% have two or more.
Underestimating inflation- The items that seniors frequently purchase (gas, medical care, food) often have higher rates of inflation than the average rate of inflation.
Mis-managing assets– USAA recommends thinking of retirement in phases: early retirement-60s to mid-70s, middle retirement- mid-70s to mid-80s and late retirement- mid-80’s to end of life and working with a financial planner to ensure you have enough to last through the end of retirement.
If you are concerned about being able to live the retirement lifestyle you have always wanted, a reverse mortgage loan could be a useful tool to help make ends meet. Reverse mortgage loan funds can be used however the borrower would like as long as certain requirements are met such as, paying off any existing mortgages on the property, continuing to pay homeowners insurance and property taxes and maintaining the home according to Federal Housing Administration guidelines. For more information about reverse mortgage loans and to find out if you might be eligible, please call 800-976-6211.