Our daily roundup of retirement news your clients may be thinking about.
How seniors can finance upsizing to a new home
Older couples who consider moving to a bigger or more expensive home have the option to apply for a reverse mortgage for purchase, according to this article on CBS Moneywatch. For example, say they sell their old home for $300,000 and purchase a bigger house for $450,000. They can use a portion of the sale proceeds to pay a large down payment, say 52% of the new property's home sale price, and finance the rest with a "reverse mortgage for purchase." In the process of this example, they would even pocket up to $66,000 from the home they sold, minus any closing costs. If they used Realtor, the commission could be several thousand dollars and would reduce their net gain somewhat. The reverse mortgage loan doesn’t need to be repaid until they sell the new home, pass away or move out, as long as other obligations are met, such as property taxes, insurance and maintenance.
Prepare for the rising cost of living in retirement
Clients engaged in retirement planning tend to overlook the impact of inflation through their golden years, according to this article on U.S. News & World Report. A report from the Stanford Center on Longevity shows that people are likely to have a longer retirement, meaning their retirement income should be bigger in the advance years to account for the increase in the cost of living. For example, clients who plan to live off on a monthly income of $3,000 may need more than $4,000 in income per month when they are halfway through their golden years to maintain their lifestyle.
Are clients worried about running out of money during retirement?
People are advised to work longer and boost their savings rate if they fear they will not have enough money to cover their needs through their golden years, according to this article on MarketWatch. They may also want to defer their Social Security retirement benefits and get a part-time, temporary or seasonal job to have secondary income. Retirees who worry about running out of savings may find ways to minimize their spending and consider running their own business to earn more income.
A hidden Social Security windfall for divorcees
Divorcees are entitled to Social Security benefit based on their former spouse's record once they reach 62 and their ex-spouses are collecting their own retirement benefits, according to this article on Kiplinger. They qualify for the divorcees' benefits if the marriage lasted for at least 10 years and they have never remarried. The clients' own retirement benefit should be lower than their divorcee's benefit, which is 50% of their former spouses' retirement benefit.