How secure is your pension program?
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OK, first, we aren’t glass is half full, chicken is falling folks. We believe this financial mess will sort itself out, that clearer heads will prevail and even though some wealth has been wiped from the books (just a Trillion!), that the rapture isn’t just around the corner. So its important to be able to understand where your pension is parked and will it make it through the big Wall Street sifter? There’s going to be 4 or 5 big banks left standing, the US government will make sure of that. They are encouraging any problem banks to be conjoined with the majors and all the bad stuff put into a lost and found bin for future generations to deal with, at least some of it.
Is your pension secure in how its positioned in this market, do you really know? According to the National Center for Employee Ownership , 10,000 employee stock ownership programs and stock bonus and profit sharing programs were “primarily invested in employer stock” with an estimated value of plan assets exceeding $928 billion and impacting 11.2 million workers. What if those programs are pressured to continue to deliver their payouts? Can you guarantee the payouts into your golden years? I hope you can, in fact I hope social security can continue to deliver as well but are you willing to bet they will? What is your recourse and what would you do to hedge against the loss of your pension? Have you considered a reverse mortgage?
The reverse mortage can work as a supplement to retirement income just as pensions and social security are currently providing and even if you are taking advantage of both now, you could increase your monthly cash flow through the use of a reverse mortgage and its many benefits. There are fees involved with originating the reverse just as there are fees with other large financial transactions (monthly insurance premiums, real estate commissions, annuity purchases, etc) so its often hard for folks to get beyond the costs involved with originating the reverse. Those closing costs, as most folks call them, are broken down into 3 components, 2% of the homes appraised value for mortgage insurance premium (if under FHA lending limit), another 2% for lender origination fee and the typical costs of conversion or closing costs. The total costs could run 5% of the homes value. The cost is inconsequential if it unlocks an opportunity to open access to significant amounts of liquidity that can increase quality of life issues that you are worried about.
Here’s an example: a 70 year old husband and wife in a $250,000 home in Kansas City could get up to $120,000 in a reverse mortgage. That money could be put into the credit line feature of the reverse mortgage and be worth $150,000 in five years or $187,000 in ten years. Can you guarantee that kind of growth in other investment vehicles? Or they could use it for whatever and whenever they needed it, to help with health care concerns, to remodel the home, to help pay off high interest credit cards or other debt, or anything they want. ANYTHING! Or if that same couple wanted to supplement their income with a lifetime payment, they would be able to get $750 a month for the rest of their lives as long as they lived in the home. That’s guaranteed regardless of their future home value and it helps provide the better quality of life we talked about.
Isn’t that what its really all about anyway, the quality of your life, the ability to maintain your dignity as a senior. You worked hard all your life, you own your home, you raised your familty here, you put alot into the system and if the system isn’t providing you all that you desire, you should be able to tap back into the thing that you worked so hard to maintain, your home’s equity. The reverse mortgage is a way to turn an illiquid asset into cash flow significant enough to change your life.
Its not a risk proposition, its your home, and its YOUR money.
See our other articles on how reverse mortgages work and if they are options for you:
“Why its never been a better time to get a reverse mortgage”
“Reverse mortgage rates come down”
A Few More Related Articles of Interest:
October 1st, 2008 at 3:19 am
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