July 2011

Boomers and Seniors Financial Insecurity

The news out of Washington to resolve the nation’s debt ceiling continues to drag on due to the inability for the Republicans in the House to come to a majority vote to pass their proposal, which as we all know will not get passed in the Senate.

What a mess and the financial markets are negatively reacting to this continued uncertainty as to whether or not the country will be able to pay their bills next month.   And if this does happen, this may mean that Social Security checks will not be going out to seniors which is unthinkable.  And now the latest figures are indicating that the Boomer generation is very worried about their financial future as well as their retirement funds have dropped to such low levels, that they will be unable to retire.

My personal feeling is one of frustration but I do feel that in the future the importance and value of Reverse loans will finally gain some respect.   As the population ages into the future, more people will make a Reverse mortgage part of their over-all financial plan & will be simply become another option for additional funds to live life and pay the bills each month.

Following is the remaining portion of the article that I posted yesterday:

Percentage of Economically Insecure Senors Surges to 75% and Counting

“Not only are 36% of seniors economically insecure, but also 40% of seniors are classified as financially vulnerable, meaning they’re neither secure nor insecure, for a total of 76% of seniors in what IASP calls an “economically precarious position.” And minorities have been hit especially hard, with 52% of African-Americans and 56% of Latinos experiencing economic insecurity.

Nearly half of single female seniors are at risk, too, at 47%, as women generally outlive men and thus face a higher chance of outliving their resources. This, says IASP, is especially true since women generally earn less than men and often spend less time in the workforce due to raising families and fulfilling caregiving duties.

In order to alleviate and even reverse these trends, says IASP, action must be taken. However, contrary to some proposals to “dramatically alter” Social Security or Medicare benefits, IASP says it’s better to work on policies and interventions designed to reduce expenses and boost income.
Suggestions along these lines include increasing asset-building opportunities throughout the life-course, expanding low-income housing options for seniors, and strengthening Social Security for vulnerable groups.”

By Elizabeth Ecker Published in Data, News, Reverse Mortgage 7/26/2011

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Financially Insecure Seniors

These are the most difficult times I have ever seen our country experience and no one is immune to the financial and economic insecurities that our nation is struggling through at this time.   Every day it seems as though we only hear more bad news…layoff’s, mass murders, another politician being exposed for some sort of sexual impropriety, climate change and on and on it goes.

I would prefer to post something cheery and encouraging here, as we all need something to make us laugh a little and put a smile on our face.   However, we are pretty powerless over the events that are unfolding each day and it simply comes down to ourselves and our families to make the most of where we find ourselves.

Some may find having those options more unlikely, especially if you happen to be a senior citizen.   More bad news….I am going to re-post and article in two parts that discusses the latest findings regarding how many seniors find themselves very, very financially insecure.

Percentage of Economically Insecure Seniors Surges to 75% and Counting

July 26th, 2011  |  by Elizabeth Ecker Published in Data, News, Reverse Mortgage

“Circumstances for retired seniors have gone from bad to worse, according to a July 2011 Research and Policy Brief, as household budgets are increasing while household assets drain away. The Institute on Assets and Social Policy (IASP) released a brief titled From Bad to Worse: Senior Economic Insecurity on the Rise, which examines the economic security of seniors and an increasingly common fear of outliving resources.

Declining household assets, inadequate household budgets, and increasing housing costs are the three main trends driving economic insecurity, says IASP. The number of households experiencing financial burden due to increased housing expenses rose to 50% in 2008, defined by the federal standard as 30% or more of a senior’s annual income going toward housing. And although many seniors have equity in their homes, says IASP, many of those homes require extensive—and expensive—maintenance, while other seniors are renters and don’t own their own properties.

Additionally, retirement assets are no longer as substantial as they once were, especially with the shift from defined-benefit plans to defined-contribution plans, and many senior households end up with a negative balance after taking care of necessary expenses.

Overall, economic insecurity among senior households experienced a notable rise from 27% to 36% between 2004 and 2008, the IASP found through using the Senior Financial Stability Index. And, says IASP, this began to happen even before the Great Recession, leaving the concern that seniors’ future prospects may get even worse.”

I will post the remaining part of this article on 7/29/11

 

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Reverse Mortgage Lending Limits

At this time, the clock is ticking on reducing the Lending Limits on the federally insured Reverse loan program that is for senors age 62 or older.   Currently the limit is set at $625,250 but it has been less in the past.   The most recent amount was at $417,000 but due to the difficulties in the real estate sector and home values continuing to fall,  the possibility of reducing the Lending Limit back to $417,000 is looming within the next several weeks.

At a time when seniors need more assistance than ever due to budget cutbacks on government sponsored programs and the potential for cutbacks on Medicare and Social Security,  using funds from a Reverse loan are the only remaining option for financial relief.   Hopefully, the current amount will remain in place and not reduced, eliminating the opportunity for a borrower to receive as much money as they can from a Reverse mortgage  for their medical and cost of living expenses.

There is a  pending bill,  H.R. 2508  that has been introduced as of Friday, July 15th., requesting that the current Lending Limits remain in place for FHA loans but it’s not known if it will be passed or not.    This would also include the “Forward” site of the loan program that has made home ownership possible for millions of Americans and it would keep that Lending Limit at the current amount of $729,750.

All we can do is wait for the House Committee on Financial services to review this important issue and there should be a hearing on it prior to October when the reduction would be taking place.

Let’s hope that that make the best decision for seniors,  First Time home-buyers, the housing market and not wound it any further,  just when everyone else is struggling in these difficult times and needs the resources to buy a home or stay in the one they currently own.

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Collecting Social Security

With all of the Baby Boomers that are in the position to begin collecting Social Security, the question is coming up for many as to when is the best time to begin receiving their benefit.   Given the  uncertainty of Social Security’s future and if there well be enough funds for the “Boomers”, some may be thinking that they probably should start drawing on it now rather than later.

Brett Varner has covered this question in the following article and mentions that AARP has a calculator to assist with that determination.   Apply for it when you are 62 years of age?   Or is it better to wait and apply for it later when one could receive more money?

“New Calculator Help Plan for Social Security Benefits.”

A new planning tool and calculator was launched by AARP to help Americans decide when to claim benefits and prepare for retirement to best acheive their financial goals.

The Social Security Benefits Calculator is designed to be an interactive tool for users to evaluate the ideal age for claiming their benefits according to their financial goals.  The calculator has been launched in conjunction with AARP’s “Ready for Retirement?” campaign that offers a ten-step approach for envisioning and planning for a secure retirement.

“Our research shows that many Boomers are worried about retirement because they don’t feel prepared,” said Jean Setzfand, Vice President of Financial Security at AARP. “With our new easy-to-use calculator and our ‘Ready for Retirement?’ resources, we want to help older Americans understand retirement as a life transition, visualize their goals, and take the steps needed to build retirement security.”

The calculator opens to an Overview tab that encourages people to wait to claim their Social Security benefits, noting that the longer they wait the more money they will receive on a monthly basis.  This recommendation follows data that indicates more than 50% of new claimants in 2009 elected to receive benefits at their earliest eligibility age of 62.

After a short series of questions, the calculator offers a projection of expected benefits and then displays a graph on how the amount received each month would grow if benefits were claimed at a later age.

“Too many people avoid planning for retirement because they think it’s just a numbers game, or they simply don’t know where to start,” concluded Setzfand. “More and more in today’s environment, though, individuals really have to take responsibility for ensuring their own retirement security.”

Reverse Review 7/13/11

 

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