Are You Ready For Retirement? A Reverse Mortgage Could Help!
by Jeffrey L. Bangerter
August 29th, 2008
A study by the Center for Retirement Research (CRR) at Boston College shows that shows that 61 percent of today’s workers will be at risk for not being financially prepared to retire. Could a reverse mortgage help solve this problem for you?
The 17-point increase from the previous Index number of 44 percent –- released in July 2007 — demonstrates how the surging cost of health care is having a significant effect on retirement savings, says the CRR. The index, underwritten by a grant from Nationwide Insurance, is a percentage measurement of how many working Americans are ‘at risk’ of being unable to maintain their standard of living in retirement.
This raises the question of what role — if any — can or should be played by a reverse mortgage loan. For some individuals a reverse mortgage will help maintain and improve living standards while for others a reverse mortgage may not be an appropriate financial choice. The trick is to investigate and know the difference.
“While recent studies have found that households are not generally knowledgeable about personal finance issues, we wanted to know whether they have a good gut sense of their own retirement preparedness,” said Alicia H. Munnell, CRR director. “We found that nearly 60 percent do and nearly 40 percent do not. Some worry too much. Some worry too little.”
Factoring in health care costs increases the number of households that are not concerned enough, indicating that these escalating costs will be a major driver for not having enough saved. The CRR has estimated that a typical couple retiring in 2010 would need about $200,000 in savings to cover their out-of-pocket health care costs over their remaining lifetime. And this amount is expected to grow rapidly over time.
Paul Ballew, senior vice president of customer insights and analytics for Nationwide, added that “future savings may not be the top priority for many households; they may be focused on more pressing concerns. With the current economic climate crunching Americans’ sense of financial security, it’s understandable many are focused on making ends meet in the short term. Yet, it’s important to prioritize and reorganize –- rather than eliminate –- your savings habits. Careful planning that addresses short term concerns while still working toward long term goals is crucial to surviving tough economic times.” Get the full report Here.