For many Americans, even those who have saved consistently toward retirement, the sad discovery as they near retirement age is that they will not have enough income to support themselves after they stop working.

If you are in your 50s or 60s and getting serious about preparing for retirement, you may be considering following the traditional path toward solidifying your finances: cutting expenses, saving more money, investing more boldly and planning to work a few more years.

Working longer to retire

According to MarketWatch, the Employee Benefit Research Institute (EBRI) recently published a study, "The Impact of Deferring Retirement Age on Retirement Income Adequacy", that shows that many consumers will need to work into their 70s or even their 80s in order to afford retirement.

The study shows that workers who have earned the lowest income (less than $11,700 per year on average throughout their career) would need to delay their retirement until age 84 before 90 percent of those households would have a 50 percent chance of affording retirement. Those workers in the highest income bracket for the study, who earned an average of $72,000 or more over the course of their career, have a 50/50 chance of having enough for retirement if they stop working at age 65.

Benefits of working longer

MarketWatch says that delaying retirement from age 65 to age 69, at least for those who earn an average yearly wage in the lower half of the income range, can increase their ability to afford retirement from 25 to 50 percent.

According to an AARP report, in 2009 36.7 percent of Americans age 65 and older earned income from employment. MarketWatch says that a new phenomenon is that many of these workers age 65 and older are looking for a second job or to transition into freelance work or to work from home.

The EBRI study stressed the importance of older workers continuing to participate in a retirement plan through their work after they reach 65. In other words, if you choose to work past the traditional retirement age, it is important to use your income wisely to pay off any debt and invest in a retirement plan.

Reverse mortgage option

Another potential source of retirement income is a reverse mortgage. Available only to homeowners age 62 and older, a HUD reverse mortgage can provide financial security in several ways. Many homeowners opt to pay off the remaining balance of their current mortgage with a reverse mortgage, freeing themselves of the burden of a monthly mortgage payment.

If your home is already paid off and you don't want to sell it or move, a reverse mortgage lender can work with you to explain your options for accessing your home equity. You can even use a reverse mortgage to buy a home.

The amount you can borrow with a reverse mortgage depends on your age the amount of equity available in your home. Borrowers can choose how to access their money: a lump sum, a line of credit or monthly payments or a combination of those options. The loan is repaid when you sell the property or pass away, and any remaining equity in the property is returned to you or your heirs.

If you are searching for sources of savings and income to ease your retirement years, consult with a reverse mortgage counselor to see if this option could fit into your financial plan.

Michele Lerner

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance and business. Her clients include The Washington Times, Urban Land Magazine, NAREIT's Real Estate Portfolio, and numerous Realtor association publications. Michele's first book, "HOMEBUYING: Tough Times, First Time, Any Time" is available now at Amazon.com or from www.MicheleLerner.com.

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