Independent retirement accounts (IRAs) and 401(k)s have long been popular strategies for funding retirement. But with higher health care costs and other expenses rising to the surface for many retirees, they may be forced to look at non-traditional ways to fund retirement, including reverse mortgages, according to a recent article by U.S. News & World Report.
Diversifying income in retirement is vital, says Kimberly Foss, founder and president of Empyrion Wealth Management in Roseville, Calif., in the article.
There are small things that the article recommends a retiree could do to bring in some extra income such as reselling items on eBay or Amazon or selling off assets like second vehicles, RVs and other items that are no longer needed that could bring in a significant amount of income.
A more permanent and reliable option is taking out a reverse mortgage. For homeowners 62 and older, a reverse mortgage gives a homeowner the opportunity to receive regular payments based on the equity in their home, the article says.
“Since the house must often be sold to pay off the loan, having an upfront conversation with family members can help avoid any unpleasant surprises later.”
The unpleasant surprises are likely referring to the fact that if the homeowner passes, the loan becomes due and payable, meaning the homeowners heirs will be responsible for paying the loan. This is usually done with the sale of the home, but could done with saved or gift funds.
Read the full article on U.S. News & World Report.
Written by Alana Stramowski