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Our parents and older loved ones are living longer than they expected. Unfortunately, their savings may not last with them.
Today, about 45 million Americans are over age 65. That number is expected to more than double by 20601.
Better healthcare and an increased awareness on healthy lifestyle has allowed most of these Americans to live longer than ever before. The average U.S. life expectancy increased from 68 years in 1950 to 79 years in 20131.
While many older adults have more years to live, they don’t always have the savings to realize a high quality of life through retirement.
The Government Accountability Office found households with members age 65 to 74 have savings of about $148,000, which equates to between $310 and $649 per month2. This isn’t much when you have to supplement modest social security payments and, if you’re lucky, a pension.
“Some people are already running out of money at that age,” says Monica Emmert, a reverse mortgage specialist with Finance of America Reverse, LLC. “They’re not predicting the future. They’re already there.”
If your loved one struggles to pay the bills, you can help them find a solution. Many older adults have been able to improve their financial lives with a reverse mortgage.
A reverse mortgage gives adults age 62 and older access to funds that make a difference. By tapping into their greatest asset—home equity—qualified borrowers can eliminate mortgage payments. Free from that large monthly payment, your loved one can live more comfortably with less financial stress. Best of all, they get to stay in their home as long as loan obligations are met. The borrower remains responsible for payment of taxes, insurance, and other property charges.
Here are a few benefits to a reverse mortgage:
Also, the IRS considers a reverse mortgage a loan advance, which means it does not tax proceeds. Consult your tax advisor. Loan proceeds usually don’t affect Medicare or Social Security benefits.
A reverse mortgage is complex. Caregivers can help their parents understand the loan terms by taking the following steps:
If your loved one owns his or her home and worries if they’ll outlive their retirement, a reverse mortgage may help them rest easier. By converting equity into tax-free funds*, your loved one can get out of debt, cover unexpected expenses, and enjoy a life with fewer financial worries and more freedom.
For more information on how a reverse mortgage can help your loved one, visit the Finance of America Reverse LLC caregiver resource page.
* Not tax advice. Consult a tax professional.