An increasing number of unemployed people who identify themselves as “retired” have been thrown out of work due to the ongoing economic impacts of the COVID-19 coronavirus pandemic. For those who find themselves suddenly in retirement, it’s important to find options which can assist with cash flow, and in some cases this can include a reverse mortgage.
This is according to financial columnist Liz Weston in a new article published this week by the Associated Press (AP). Early retirements are surging because of the pandemic, which has led many retirees to try and pick up the pieces to determine what should be next for them, Weston says.
“The share of unemployed people not looking for work who called themselves ‘retired’ increased to 60% in April from 53% in January, according to a study by three economists,” Weston writes. “The study was done in the early days of the pandemic, well before tens of thousands of businesses nationwide closed permanently and others began offering early retirement packages to trim their workforces.”
This will naturally lead people living on a fixed income to strain their existing financial assets, particularly if they’re like many retirees and have not saved enough money prior to becoming retired. For those people, there are several options worth exploring further.
“Tally your expenses and identify any you can trim,” Weston advises. “Include irregular expenses, such as home repairs or a car replacement, that you’re likely to face in coming years.”
“Must-have” expenses for a senior includes health insurance, since it can be very dangerous not to have it in the midst of an ongoing health crisis like the current pandemic. If a retiree is not yet 65 and able to qualify for Medicare, then they should plan on paying for coverage in the meantime, according to the perspectives of economists Weston spoke with.
Downsizing should also be a consideration, potentially on a radical basis, Weston writes. However, one potential option for seniors in specific situations can also be a reverse mortgage.
“If you can’t cover expenses with your income, you may have other alternatives,” she writes. “If you own a home, have substantial equity (at least 50%) and are at least 62, a reverse mortgage can help you turn your home’s value into a guaranteed monthly check. Or you may decide to sell your home and find somewhere cheaper to live.”
Some downsizing options entertained by older Americans has been the prospect of moving to an entirely other country for a few years, which in some cases may allow an older person to stretch the money they have.
“Obviously, an overseas move isn’t for everyone, particularly in a pandemic when many countries are restricting travel,” Weston writes. “But for some adventurous types, it could be at least a partial solution.”
Read the article at AP.