“Needs-based” borrowers aren’t the only ones worried about retirement
More Americans are having a retirement panic attack.
Some never saw it coming. Of course, throughout the decades of our working life we know eventually we need to have the means to retire without income from our job, yet still, for many, the stark reality of retirement comes as a shock.
“At a party, my friend was asked how his recent retirement is going. He lamented, “I’ve had some rough nights and more than one panic attack.” I found his reply surprising since we had talked earlier about his financial situation, and he had more than adequate retirement savings. The problem? He was caught off guard by the emotion that goes with suddenly not making money.” So begins Forbes contributor Steve Parrish’s recent column published last Thursday.
His friend, fortunately, had saved enough for his non-working years. Imagine the stark terror for those who find themselves with little or no money to retire? “The trick is to arrange the conversion of your capital into a monthly income before leaving the workplace”, says Parrish. Even savers who dutifully tucked away money may find themselves looking over the precipice of retirement wondering how they’ll survive the journey. The reality is that needs-based borrowers, as HECM professionals call them, are not the only ones feeling squeamish about retirement.
That said, each will have to look to potential sources of income in retirement. Social Security, pension benefits, 401(k)s, and other investments to name a few. One source Parrish notes is a reverse mortgage. “If you have significant equity in your home, you can select a tenure option in a reverse mortgage. This would provide an ongoing monthly income through accumulating loans against your home equity. And that income can continue until you sell, leave the house or die”, he writes.
Read the Forbes column here