Financial planners have long advised to start saving for retirement as early as possible, but with Baby Boomers retiring at high rates, there is the realization among many that they have not saved nearly enough. There are, however, some options to make retirement a bit more comfortable for those who may not have enough saved, including the use of reverse mortgages, according to a recent article by The New York Times.
There are ways to redefine retirement by working longer, working part time in retirement, or delaying Social Security. A pre-retiree can also try to “power save,” or if already retired, there are public benefits like subsidized housing, food benefits and lower-cost utilities to look into, the article points out.
But to help close the gap, especially if delaying Social Security is an option, tapping into home equity may be an strategy for some retirees.
“Reverse mortgages can give you a lump sum, a stream of monthly checks or a line of credit you can tap as needed,” the article writes. “You don’t have to make payments, but the debt grows over time and is paid off when you move, sell or die. The earliest you can apply is 62, but the longer you wait, the more money you can get.”
Using a reverse mortgage to pay for unexpected medical expenses was one use for the product highlighted in the article. A New Jersey man is investigating the product after his wife’s cancer diagnosis 15 years ago. They haven’t been able to save any money for retirement due to high medical bills.
Though, the article does point out that reverse mortgages are complex and can be costly, so potential borrowers should think about if the product is right for his or her specific set of circumstances.
Read the full article by The New York Times.
Written by Alana Stramowski