The Cost of Aging

The Cost of Aging

“After factoring in supplemental insurance premiums and other uninsured health costs, the average retiree only takes home 75% of his or her Social Security benefits, according to a new study from researchers at Tufts University and Boston College.

The researchers also warn that they only analyzed medical expenses, citing a 2017 paper that concluded that housing costs, taxes, and “non-housing debt” eat up about 30% of a retiree’s income.

In fact, for three percent of retirees, out-of-pocket health expenses actually exceed their Social Security Old Age and Survivors Insurance (OASI) benefits, the team concludes.” The preceding information was published in Reverse Mortgage Daily, 8/10/17.

Increasingly Retirement Income Certified Planners (RICP) are including a reverse mortgage in the tools necessary to fund lengthy retirements. A substantial number of people are outliving their retirement funds.

The equity in a home, often the largest single asset owned, is easily accessed with a reverse mortgage, eliminating the mortgage payment, if there is one. (You are still responsible for property taxes, insurance, and maintaining the home.)

The tax-free line of credit that may be established grows at about 5% a year compounded annually. No interest is paid until the funds are used. Most RICPs encourage accessing the line of credit earlier rather than later.

If you open a line of credit of around $150,000 at 62 years old, in ten years, when you are more likely to need it, it will have grown to around $270,000. (Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement by Wade Pfau, Ph.D, CFA)

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