Retirement is supposed to be a time for mental expansion and relaxation after a productive career, not a stressful experience or a grand lesson in frugality. The path you or your family members take will be based, in most cases, on planning. The cost in time, effort, and money of even a basic plan far outweighs the cost of having no plan.
Planning is actually elementary. It really comes down to living within our means and nothing more. The problem arises from the standard of living that we have set for ourselves when we are still working. Once we retire and stop earning the same income level, we often expect to maintain the same standard or lifestyle. In many cases, this is achievable but it requires planning. Unfortunately, many people are not receptive to planning.
Why is retirement planning so important? For those that don’t see the importance of a plan, or flat out reject the need for a plan, the excuse that enters the equation is called “debt”. Debt and its constant availability in today’s society provides an easy way out or an excuse. We can use debt to push off decisions into the future because we don’t want to deal with them. We can use debt to maintain our standard of living until we hit a brick wall. This is what I see firsthand that a lot of people do in retirement. How can we avoid this? This is a question, not just for the retiree or senior but also, for their families.
Debt can be productive for companies if it’s manageable and can be serviced by the business cash flow. However, if the debt is unmanageable or otherwise unsupported by the money coming into the business, it can often cause the business to fail or go out of business. This is the same basic principal people face in retirement.
The key to retirement planning is to start early and have a diversified plan for your income, assets, and select debt, if this needs to be part of the equation. What will your income level be? Will your assets produce income or will the principal be dissipated over time? What kind of debt do you have or expect to have? Do you have home equity and are their options where it can help you? These are some of the basic questions that will allow you to live within your means and not become too reliant on debt.
Regardless of your planning or your income and asset situation in retirement, it is important to be in control so you can have a secure and enjoyable retirement. A Reverse Mortgage can be a very constructive tool that will allow you to achieve a high level of control as well as potential supplementary income, an emergency reserve, and a compounding safety net depending on your individual scenario. A Reverse can also be used as a vehicle to neutralize monthly debt payments, such as existing mortgages, home equity lines, and other high cost debt like credit cards. A Reverse Mortgage may also surprise you and your advisors with some very attractive spousal and estate protections.
In summary, it is never too late to assess your situation and gain the advantage with a plan. Remember, debt can hurt you but in most cases only if you don’t pay attention to it and use it as an excuse. Lastly, please don’t go without a plan, everyone should investigate the merit of the government insured HECM Reverse Mortgage to see if it makes sense to add to their retirement plan.
George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Helping seniors with Reverse Mortgages in Virginia, Maryland, DC and Pennsylvania.
Questions/Comments encouraged.