People are living longer than ever and by 2050 there will be an estimated one million centurions in the United States. However, living longer also means running the risk of outliving retirement savings, explains a recent article by Investment News.
Financial advisers are starting to get the message that their clients are living longer and are urging them to save more money, according to an Investment News survey of 348 advisers.
Reverse mortgages are becoming a more popular solution to help close the gap when seniors start to outlive their retirement savings, but there are still some issues surrounding the product that can make it a tough decision for some.
The issue of co-ops is brought up in the article as a couple in their late 90’s isn’t able to find a bank that will give them a reverse mortgage on their apartment situated within a co-op.
“To maintain their current lifestyle, they need $5,000 to $6,000 a month, an amount not being met by their Social Security benefit’s and Ms. Blum’s income,” the article says.
Currently, reverse mortgages are not allowed in co-ops, though some politicians and advocacy groups are pushing to make these dwellings eligible for Federal Housing Administration insurance.
On the flip side, many seniors are still a bit skeptical of the product due to the fact that their children may not have an inheritance if they take out a reverse mortgage, explains the article.
Cash inheritances are not as popular anymore since retirement is so pricey, but a lot of the advisers surveyed said children of their clients are still expecting an inheritance in the form of a family home.
Though with the rise in reverse mortgages comes the fall of homes being passed down within families, explains the article. So in many cases, it is now really coming down to choosing financial stability in retirement or keeping equity in the family home in hopes of passing it down to heirs.
Read the full article on Investment News
Written by Alana Stramowski