Reverse Mortgage Guide

The Pension Rights Center raises an interesting point: Does your pension have a cost-of-living adjustment?

Don’t be too quick to say yes. While state and federal pensions have COLAs, that’s unlikely to be true with private programs.

If you get $5,000 a month today then even with small amounts of inflation it will buy far less than $5,000 in goods and services in five years.

For example, if you got $5,000 a month in 2002 then just to stay even you would need $5,733.74 in 2007, according to the inflation calculator at the Federal Reserve Bank of Minneapolis.

In a similar sense, a lump sum payment from a reverse mortgage may be good news today — but the same dollars are unlikely to have the same borrowing power down the road.

See:

Can Your Pension Plan Afford To Give You a COLA?

This entry was posted on Wednesday, November 28th, 2007 at 7:12 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.