When you retire, you no longer have to go to work everyday. Most people choose to live within a reasonable distance of where they work and buy a home within commuting distance. After retirement, there is no longer a need to live within commuting distance and retirees must make a choice on whether they will keep their existing home or sell it and move somewhere that they want to live. Ignoring this choice is actually a choice to keep their existing home. Why sell your home in anticipation of retirement? There are a number of reasons to consider selling your home. The home may be larger than what you need or want in retirement. It could also be in a neighborhood that you no longer want to live in. Many families decide where to live based on the quality of the schools in an area. But once the...

The best time to start taking Social Security benefits is one of those questions with no right answer. Even if you can do the difficult math required to understand the differences between the net present values of all available options, you can not predict accurately how long you will receive the benefits. Social Security offers some level of inflation-protected income for life, but no one truly knows how long they will live. That makes even the most complex calculations only an estimate of what is really best, and then your specific circumstances could change everything. Is there a benefit to delaying your Social Security benefits? According to a recent article in The Wall Street Journal, if you are healthy, you can enjoy a large benefit from delaying the start of your benefits. In “How...

Inflation has been present in almost all countries for most of the last century – certainly Japan is without exception. The amount of inflation has varied, as periods of double-digit inflation briefly hit us, while slow but steady price increases are considered normal. If you look solely at official price indexes, inflation seems to be an almost unavoidable part of life in the United States. Social Security payments are indexed to these official indexes, but that offers little comfort to most retirees. How inflation is measured, and why it matters Official inflation is measured by comparing the prices paid by a family for a typical basket of goods each month. The typical basket weights the price of each item, using the percentage of income a typical family spends on each item each mo...

Financial news channel CNBC recently completed an online poll asking viewers whether or not they planned to sell their home to finance their retirement. Only 30 percent of the respondents said that selling their home was a deliberate part of their retirement planning. A majority of those participating in the survey (54 percent) said they would definitely not look at selling their home as a source of retirement funds. Some of the respondents were unsure about whether or not they would have to sell their home. In this case, most probably don’t want to sell their home, but worry about having the financial resources to stay in their home. Many retirees find that maintaining their home can be very expensive. These expenses, along with routine living expenses, could come after you see your inc...

Interest is the cost you pay on a loan. Mortgages have been available with fixed rates or adjustable rates for a number of years. Fixed rates carry the same interest rate for the life of the loan. The interest rate can change with an adjustable rate mortgage based on what happens in the financial markets. Fixed rates are often thought of as the more conservative option because they eliminate the risk of higher monthly payments if interest rates rise. Rates have been falling since about 1981, however, and many people believe that they will eventually reverse course and rise for several decades. Many of these people have believed that for at least ten years now and rates are still near record lows. Many home owners have benefitted from low payments over that time with adjustable rate mortg...

Reverse mortgages can be secured with one of two (or a combination of the two) faciltiies: With fixed interest rate that never change over the life of the loan, or With adjustable rates that could change as frequently as monthly Adjustable rate reverse mortgages usually charge a current interest rate that is based on LIBOR. The rate could be quoted as something like “LIBOR + 2%” or some other margin. The London Interbank Offer Rate is defined as the average interest rate that leading banks in London charge each other when making short term loans. Banks often borrow money from other banks so this rate is updated daily and it is widely available. Reasons we base our reverse mortgage interest rates on LIBOR Loans are actually made based upon LIBOR rates so the rates are available for se...

Saving for retirement usually includes contributing to a 401(k) plan at work or opening one of the many possible individual retirement accounts that offer tax benefits now and income later in life. Many people have automatic payments made into these accounts with each paycheck. In that way, the retirement account is like a monthly bill. While working, you accumulate wealth by paying that bill each month and after 30 years or more you turn to that wealth for retirement income. Mortgages are usually paid off over 30 years, although some home owners have used a 15 year mortgage to speed up their equity accumulation. No matter how long the loan is amortized over, each monthly payment generally reduces the amount you owe and increases the amount you own. Interest-only mortgages are a notable ex...

Traditional retirement planning involves many assumptions – like rates of return, life expectancy, and risk tolerance – and these will vary by planner. However, there is one assumption that rarely changes. Almost all planners believe that you should withdraw no more than 4 percent of your portfolio every year. Statistically, the 4 percent withdrawal rate has a 90 percent chance of making your money last at least 30 years. The problem many retirees face is that 4 percent isn’t enough to live on. Fidelity Investment reports that the average retirement account had a balance of about $71,500 at the end of 2011. Four percent of $71,500 would provide about $240 a month in retirement income. That amount will vary based upon market returns and can go down if the market crashes. Many surv...

Home healthcare can be very expensive. Recent government data estimates that the cost for a home health aide to visit your home three times a week to provide in home care could cost at least $18,000 a year. Paying for this can easily exceed the resources available to many families, unless they sell their home. A reverse mortgage allows a home owner who is at least 62 years old to use the value of the equity in their home without having to sell the home. The amount you borrowed under the mortgage, along with all of the interest fees, would generally be due only when you leave your home. Reverse mortgages are designed to reduce your financial burden and allow seniors to stay in their homes as long as possible. How a reverse mortgage can pay bills, like in-home healthcare These mortgages redu...

After saving for many years, retirees start drawing down their nest eggs when they finally stop working. The question of how much money to take out each year varies for different people, but generally speaking, financial planners have been advising clients that they can safely withdraw about four percent of their assets each year. This is based on research that shows at that withdrawal level, funds will probably make the money last throughout the average retiree’s lifetime. Individual circumstances vary and there are no guarantees that any withdrawal rate can be sustained over anyone’s lifetime. The four percent rule is used as a supplement to other income. Social Security benefits will also offer income and some retirees may also have pensions or other investments. Retirees followin...