“Happiness is not something ready made. It comes from your own actions.”- Dalai Lama XIV
What To Do When Your Nest Egg is Gone
There are many retirees out there that found their callings later in life and have decided to keep working for pleasure, as well as for financial reasons.
What happens when you’ve done all the right things and properly saved and planned for retirement — and then the rug is pulled from beneath your feet due to the unexpected and you’re left without your financial safety net during your golden years?
Amara Rose, one of my favorite contributing writers to HECM World, talked about this in a post a few months ago and I found it extremely relevant and a situation that some of my clients have unfortunately had to face themselves.
Amara mentioned one Boomer couple (66 and 71 year olds), who had everything all lined up for a relaxed and financially secure retirement. But then a combination of serial job loss, serious illness and the financial markets collapse practically eliminated their savings.
The couple asked their son and his family to move in while they tried to sell their house and move to a more affordable option in an attempt to repair the damage.
It’s unfortunate they weren’t aware of or didn’t consider a reverse mortgage, which might have been the ideal solution to enable them to remain in their home and start rebuilding their nest egg.
Now, even though the husband is employed again, they have an enormous amount of credit card debt.
Some financial pundits believe owning a house is the problem and can be a financial burden. And some advise seniors to pay off their mortgage and rent in retirement. Yet this doesn’t take into consideration that a great deal of seniors want to live out their golden years in their longtime home.
It’s true that housing can be a significant expense in retirement but it’s not the only concern or expense. According to a recent Employee Benefit Research Institute report, by age 90, “health care expenses account for more than 20 percent of the households’ entire budgets.”
End-of-life health care costs can be astronomical, even with Medicare: those in the 95th percentile of health care spending in 2011 spent almost $30,000, while those in the 25th percentile spent less than $1000.
The Keys: Preparation and Adaptation
Finding a dream job later on in life may or may not happen. But having the peace of mind that you can stay in your own home is essential to many seniors.
It’s important that there is awareness of a reverse mortgage as a possible financial tool to benefit a nest egg when creating a retirement planning toolkit – especially if you consider many mass affluent are already using HECMs to strategically support their portfolios in a down market.