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Retirement Initiative Launches Interactive Planning Tools

A “Target Your Retirement” calculator and other tools in beta testing from the Financial Security Initiative at Boston College allow users to answer simple questions about current assets and behaviors in order to present a projected target monthly income at age 62. Based on an individual’s date of birth, current savings, income and home value, the tool calculates a desired monthly income and walks users through steps that can help achieve that income.

Three target areas to improve retirement income are “control spending”; “work longer”; and “use my house,” which includes downsizing and using reverse mortgages.

An additional interactive resource called “Curious Behaviors That Can Ruin Your Retirement,” poses questions about preferences that indicate retirement planning habits. Together, the tools can help paint a picture of an individual’s retirement situation, and urge him or her to take steps toward accomplishing that goal, with housing being a major component.

One of the “most powerful ways to tap home equity,” says an accompanying guide titled “Managing Your Money in Retirement,” is a reverse mortgage. “A reverse mortgage,” the guide says, “is a new, unfamiliar, and somewhat complicated arrangement. But it 1) allows you to stay in your house for the rest of your life; and 2) provides tax-free income.

Further, it says, “most households entering retirement own their home, and the equity in their home—the value of the house less any mortgage—is often greater than their 401(k)/IRA savings. Even if the mortgage is paid off, housing costsinsurance, utilities, upkeep, and taxes—are often a retired household’s largest expense. If needed, you can tap home equity to boost inadequate incomes, cut costs or pay big medical or nursing home bills.”

Visit The Financial Security Project and its web-based interactive tool.

Written by Elizabeth Ecker