The best time to plan your retirement is before the boss does!
Getting a pink slip along with your paycheck can be devastating for anyone but for baby boomers it is likely life changing. Call it what you like but at 63 Norm knew a pink slip meant he had just met “involuntary retirement”
There aren’t many options for seniors facing involuntary retirement
Norm’s first thought was to get his real estate license. When he found out there were already more than 425,000 licensees in California the idea quickly became an afterthought. The job market for software engineers his age was almost non-existent so he had been introduced to involuntary retirement, which was going to require an adjustment to his current retirement plan.
Norm’s Retirement Dilemma
Cessation of work is not accompanied by cessation of expenses. – Cato
He could take his Social Security now, but had hoped to wait until he was 66 or 70. His pension from a previous job wouldn’t kick in until he was 65 as was the case for Medicare.
Norm knew he could pick up some contract jobs to help but he was most concerned about 1) making his mortgage payment of $2100 2) Paying for medical insurance (COBRA) until he was eligible for Medicare.
He considered rolling over his 401(k) and taking distributions from it but it had been performing so well he hated the idea of tapping it now. Like many people his age he was also worried about outliving his money. His severance package would carry him for a few months, but Norm was more concerned about the long term and how safe and secure his retirement would be.
Related: Easing the “retirement squeeze”
Reverse Mortgage to the Rescue!
Let me explain…
“I never thought I’d be talking to you guys” Norm said when we first met. “I’ve seen the TV ads with their celebrity spokesman but I thought they were a little cheesy, so I never paid much attention.
Fortunately Norm had options. Paying off his current mortgage would save him a little over $2100/mo. He would still be responsible for keeping his property taxes and homeowner’s insurance current.
Related: Because everyone needs a Plan B
He had his choice of taking fixed monthly payments for 3-5 years until his pension, Social Security and Medicare kicked in.
He could elect the RELOC (Retirees Equity Line of Credit) option to supplement his income as needed and help him cover COBRA until he was eligible for Medicare. Norm chose the RELOC for the flexibility it offered and Norm says he’s sleeping better and starting to enjoy his early retirement.
The New Reverse Mortgage isn’t for everyone…but it could be!
If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.