As if our aging population needed more bad news....
The Center for Retirement Research released a report this month showing that 51% of households are at risk of not being able to maintain their standard of living in retirement. This is a significant increase from just a year ago when the results showed only 7% faced this risk.
The reason for the increase stems from the stock market crash, the reduction in home values, and the higher full retirement age to receive Social Security.
Most pre-retirees think their expenses will go down in retirement since they are no longer paying to commute to work, buying work clothes, or eating lunch out every day. However, this is often not the case since these costs are usually replaced by increased expenses for travel and entertainment. Later, prescription drug costs and medical expenses add to the monthly costs of living.
For some seniors, a reverse mortgage can help bridge the gap between their pre-retirement income and the amount needed to make ends meet each month in retirement.
This unique, government-insured loan allows those aged 62 and over to unlock home equity without having to sell their home, give up ownership, or take on the burden of a monthly payment. Because there are no monthly mortgage payments to make on a reverse mortgage, a senior’s income or credit score don't matter when qualifying for this loan - an important feature for those in retirement and on a fixed income.
Perhaps there is some good news for our aging population after all.