Many Americans May Not Have Enough Money During Retirement

About 51% of Americans are at risk of not having enough money to maintain their standard of living during retirement, according to the National Retirement Risk Index. The index showed that even if people work until age 65 and annuitize all of their assets, including proceeds from reverse mortgages, many of them are still at risk of not having enough funds.

Retirees Face Big Challenges

Although many seniors are able to afford a decent retirement, Baby Boomers and Generation Xers may face more challenges than the older generation. Among them are longer life expectancies and limited retirement funds. In 2007, the median 401(k)/IRA balance for participants approaching retirement was only $78,000, according to the Survey of Consumer Finances. That was before many retirement funds plunged during the current recession.

Reverse Mortgages and Retirement Planning

A reverse mortgage can be a useful tool for supplementing your income during retirement. A reverse mortgage loan can allow you to tap into home equity and use the money for any purpose. The amount that can be borrowed depends upon your age and the value of your home. But your entire retirement plan shouldn’t revolve around getting a reverse loan.

If you still have a number of years until retirement, there are some things you can do to improve your financial situation. Contribute the maximum to your 401(k) or other retirement plan. For 2009 and 2010, the maximum is $16,500, according to the Internal Revenue Service. Anyone 50 or older can make an additional catch-up contribution of $5,500.

HECM Proceeds Can Help You Downsize

Downsize to a less expensive home with lower property taxes. Lowering housing costs now can allow you to put away more money for retirement if you’re still working. If you’re already 62 or older, a Home Equity Conversion Mortgage (HECM) can be used to downsize to a less expensive property. You can shop for reverse mortgage lenders here.

This entry was posted on Tuesday, December 1st, 2009 at 7:54 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.