In light of so many different kinds of stresses that global society has had to endure as a result of the COVID-19 coronavirus pandemic, one element of life that has also been affected is the prospect of retirement for older Americans. Retirement has been changed in a few key ways, and one of those negative changes could potentially be helped by a senior employing a reverse mortgage loan. This is according to a new column published at Forbes.
One of the key ways that retirement has been affected by the pandemic is in the preferences that some seniors have regarding their timing for retirement, according to the column.
“The gain in the number of Baby Boomers who retired in 2020 was more than double the increase a year earlier, according to Pew Research,” the column reads. “Whether you unexpectedly stopped working last year or you’ve accelerated your planned exit date, you want to nail a few crucial moves.”
Among these moves, someone may want to avoid taking Social Security benefit payments at the earliest possible moment, and instead wait until as a beneficiary they can qualify for additional funds added to their benefit payments if they reach the age of 70. In the meantime, tapping savings through retirement accounts and a 401K would allow for greater benefit once the higher payment age threshold is reached.
Another key thing to consider is reviewing the way retirement assets are calculated in retirement, as well as to plan for sequence of returns risk in investments. This is where a reverse mortgage can come into play, according to the column.
“[Y]ou might consider [opening] a reverse mortgage line of credit and only tap it during bear markets so you can avoid stock withdrawals,” the column says.
Others are taking the opposite approach and working longer, but this can present a whole host of other issues. Depending on the job of the senior in question, working longer could create some potential risks to a person’s health and may contribute to other increased costs – like housing and healthcare – later in life. There is also an increased likelihood of being laid off when working longer.
“Research by the Urban Institute found half of people with a full time job in their early 50s are eventually laid off, and the majority never earn as much at subsequent jobs,” the column reads. “Other research finds that many folks who intend to work longer end up retiring sooner than planned due to layoffs, illness or caretaking responsibilities.”
Another way that the pandemic has changed retirement is through the living preferences of seniors, as more Americans are finding that they increasingly want to age in place, the column reads.
“Even before COVID-19 most people within 10 years or so of retirement said they intended to stay in their own homes throughout retirement,” it reads. “Given the wrenching experience many inhabitants of nursing homes and assisted living facilities faced during the pandemic, the ‘age in place’ movement is likely to become even more popular. But to pull it off requires careful planning today.”
Read the column at Forbes.