Tag Archives: reverse mortgage

Basement-Dwelling Millennials Beware: Reverse Mortgages May Evaporate Your Inheritance

With nearly 90% of millennials reporting that they have less than $10,000 in savings and more than 100 million Americans of working age with nothing in retirement accounts, we have bad news for basement-dwelling millennials invested in the “waiting for Mom and Dad to die” model;

Reverse mortgages are set to make a comeback if a consortium of lenders have their way, according to Bloomberg.

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Columbia Business School real estate professor Chris Mayer – who’s also the CEO of reverse mortgage lender Longbridge Financial, says the widely-panned financial arrangements deserve a second look. Mayer is a former economist at the Federal Reserve of Boston with a Ph.D. from MIT. 

In 2012, Mayer co-founded Longbridge, based in Mahwah, New Jersey, and in 2013 became CEO. He’s on the board of the National Reverse Mortgage Lenders Association. He said his company, which services 10,000 loans, hasn’t had a single completed foreclosure because of failure to pay property taxes or insurance. –Bloomberg

Reverse mortgages allow homeowners to pull equity from their home in monthly installments, lines of credit or lump sums. Over time, their loan balance grows – coming due upon the borrower’s death. At this point, the house is sold to pay off the loan – typically leaving heirs with little to nothing

Elderly borrowers, meanwhile, must continue to pay taxes, insurance, maintenance and utilities – which can lead to foreclosure.

While even some critics agree that reverse mortgages make sense for some homeowners – they have been criticized for excessive fees and tempting older Americans into spending their home equity early instead of using it for things such as healthcare expenses. Fees on a $100,000 loan on a house worth $200,000, for example, can total as much as $10,000 – and are typically wrapped into the mortgage. 

The profits are significant, the oversight is minimal, and greed could work to the disadvantage of seniors who should be protected by government programs and not targeted as prey,” said critic Dave Stevens – former Obama administration Federal Housing Administration commissioner and former CEO of the Mortgage Bankers Association. 

To support his claims that reverse mortgages are far less risky than they used to be, Mayer cites a 2014 study by Alicia Munnell of Boston College’s Center for Retirement Research. Munnell, a professor and former assistant secretary of the Treasury Department in the Clinton Administration (who once invested $150,000 in Mayer’s company and has since sold her stake). Munnell concluded that industry changes requiring lenders to assess a prospective borrower’s ability to pay property taxes and homeowner’s insurance significantly reduces the risk of a reverse mortgage

The number of reverse mortgages, or Home Equity Conversion Mortgages (HECM) in the United States between 2005 and 2018 has not shown a recent upward trend – however that may change if Mayer and his cohorts are able to convince homeowners that reverse mortgages aren’t what they used to be.

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Cleaning up their image

For years, the reverse mortgage industry has relied on celebrity pitchmen to convince Americans to part with the equity in their homes in order to maintain their lifestyle. 

The late Fred Thompson, a U.S. senator and Law & Order actor, represented American Advisors Group, the industry’s biggest player. These days, the same company leans on actor Tom Selleck.

Just like you, I thought reverse mortgages had to have some catch,” Selleck says in an online video. Then I did some homework and found out it’s not any of that. It’s not another way for a bank to get your house.

Michael Douglas, in his Golden Globe-winning performance on the Netflix series The Kominsky Method, satirizes such pitches. His financially desperate character, an acting teacher, quits filming a reverse mortgage commercial because he can’t stomach the script. –Bloomberg

In 2016, American Advisers and two other companies were accused by the US Consumer Financial Protection Bureau of running deceptive ads. Without admitting guilt, American Advisers agreed to add more caveats to its promotions and paid a $400,000 fine. 

As a result, the company has made “significant investments” in compliance, according to company spokesman Ryan Whittington, adding that reverse mortgages are now “highly regulated, viable financial tools,” which require homeowners to undergo third-party counseling before participating in one. 

The FHA has backed more than 1 million such reverse mortgages. Homeowners pay into an insurance fund an upfront fee equal to 2 percent of a home’s value, as well as an additional half a percentage point every year.

After the last housing crash, taxpayers had to make up a $1.7 billion shortfall because of reverse mortgage losses. Over the past five years, the government has been tightening rules, such as requiring homeowners to show they can afford tax and insurance payments. –Bloomberg

As a result of tightened regulations, the number of reverse mortgage loans has dropped significantly since 2008. 

Making the case for reverse mortgages is Shelly Giordino – a former executive at reverse mortgage company Security 1 Lending, who co-founded the Funding Longevity Task Force in 2012. 

Giordino now works for Mutual of Obama’s reverse mortgage division as their “head cheerleader” for positive reverse mortgages research. One Reverse Mortgage CEO Gregg Smith said that the group is promoting “true academic research” to convince the public that reverse mortgages are a good idea. 

Mayer under fire

University of Massachusetts economics professor Gerald Epstein says that Columbia may need to scrutinize Mayer’s business relationships for conflicts of interest. 

They really should be careful when people have this kind of dual loyalty,” said Epstein. 

Columbia said it monitors Mayer’s employment as CEO of the mortgage company to ensure compliance with its policies. “Professor Mayer has demonstrated a commitment to openness and transparency by disclosing outside affiliations,” said Chris Cashman, a spokesman for the business school. Mayer has a “special appointment,” which reduces his salary and teaching load and also caps his hours at Longbridge, Cashman said.

Likewise, Boston College said it reviewed Professor Munnell’s investment in Mayer’s company, on whose board she served from 2012 through 2014. Munnell said another round of investors in 2016 bought out her $150,000 stake in Longbridge for an additional $4,000 in interest.

“Anytime I had a conversation like this, I had to say at the beginning that I have $150,000 in Longbridge,” said Munnell. “I had to do it all the time. I’m just as happy to be out, for my academic life.” 

Source: ZeroHedge

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Australians Face Huge Spike in Repayments as Interest-Only Home Loans Expire

Day of Reckoning: Hundreds of thousands of interest-only loan terms expire each year for the next few years.

The Reserve Bank of Australia (RBA), Australia’s central bank, warns of a $7000 Spike in Loan Repayments as interest-only term periods expire.

Every year for the next three years, up to an estimated 200,000 home loans will be moved from low repayments to higher repayments as their interest-only loans expire. The median increase in payments is around $7000 a year, according to the RBA.

What happens if people can’t afford the big hike in loan repayments? They may have to sell up, which could see a wave of houses being sold into a falling market. The RBA has been paying careful attention to this because the scale of the issue is potentially enough to send shockwaves through the whole economy.

Interest Only Period

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In 2017, the government cracked down hard on interest-only loans. Those loans generally have an interest-only period lasting five years. When it expires, some borrowers would simply roll it over for another five years. Now, however, many will not all be able to, and will instead have to start paying back the loan itself.

That extra repayment is a big increase. Even though the interest rate falls slightly when you start paying off the principal, the extra payment required is substantial.

Loan Payments

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RBA Unconcerned

For now, the RBA is unconcerned: “This upper-bound estimate of the effect is relatively modest,” the RBA said.

Good luck with that.

Source: By Mike “Mish” Shedlock

***

Australian Government Rolls Out Universal Reverse Mortgage Plan

The Australian government has proposed a wide-ranging reverse mortgage plan that would make an equity release program available to every senior over the age of 65.

Previously restricted to those who partially participate in the country’s social pension program, the government-sponsored plan will extend to any homeowner above the age cutoff, according to a report from Australian housing publication Domain.

Under the terms of the government-sponsored plan, homeowners can receive up to $11,799 each year for the remainder of their lives, essentially taken out of the equity already built up in their homes. Domain gives the example of a 66-year-old who can receive a total of $295,000 during a lifetime that ends at age 91.

As in the United States, older Australians have a significant amount of wealth tied up in their homes; the publication cited research showing that homeowners aged 65 to 74 would likely have to sell their homes in order to realize the $480,000 increase in personal wealth the cohort enjoyed over the previous 12-year span.

In fact, the Australian government last year attempted to encourage aging baby boomers to sell their empty nests to free up the properties for younger families. Under that plan, homeowners 65 and older could get a $300,000 benefit from the government, a powerful incentive in a tough housing market for downsizers — and in a government structure that counts income against seniors when calculating pension amounts.

“Typically, older homeowners have been reluctant to sell for both sentimental and financial reasons,” Domain reported last year. “Often selling property is costly, and funds left over after buying a smaller home  could then be considered in the means test.”

But the baked-in reverse mortgage benefit represents a shift toward helping seniors age in place instead of downsizing. The Australian government’s “More Choices for a Longer Life” plan also expands in-home care access by 14,000 seniors, according to the Financial Review, while boosting funding for elder physical-fitness initiatives and other efforts to reduce isolation among aging Australians.

The reverse mortgage plan will offer interest rates of 5.25%, which Domain noted is less than most banks, and will cost taxpayers about $11 million through 2022. Loan-to-value ratios are calculated to ensure that the loan balance can never exceed the eventual sale price of the home.

Source: By Alex Spanko | Reverse Mortgage Daily

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Australia Debating Universal Basic Income Plans

Greens leader Richard Di Natale has proposed a radical overhaul of Australia’s welfare system through the introduction of a universal basic income scheme, but critics believe this would only increase inequality.

Di Natale gave a speech at the National Press Club on Wednesday, outlining why he thought Australia’s current social security system was inadequate.

“With the radical way that the nature of work is changing, along with increasing inequality, our current social security system is outdated,” Di Natale said.

“It can’t properly support those experiencing underemployment, insecure work and uncertain hours.

“A modern, flexible and responsive safety net would increase their resilience and enable them to make a greater contribution to our community and economy.”

 

 

To address this, Di Natale called for the introduction of a universal basic income scheme, which he labelled a “bold move towards equality”.

“We need a universal basic income. We need a UBI that ensures everyone has access to an adequate level of income, as well as access to universal social services, health, education and housing,” he said.

“A UBI is a bold move towards equality. It epitomises a government which looks after its citizens, in contrast to the old parties, who say ‘look out for yourselves’. It’s about an increased role for government in our rapidly changing world.

“The Greens are the only party proudly arguing for a much stronger role for government. Today’s problems require government to be more active and more interventionist, not less.”

However Labor’s shadow assistant treasurer Andrew Leigh, responded on Twitter that Australia had the most targeted social safety net in the world and that Di Natale’s plan would increase inequality.

 

Leigh was unavailable for comment when contacted by Pro Bono News, but in a speech given at the Crawford School of Public Policy in April last year, he explained why he opposed a UBI.

“As it happens, using social policy to reduce inequality is almost precisely the opposite of the suggestion that Australia adopt a ‘universal basic income’,” Leigh said.

“Some argue that a universal basic income should be paid for by increasing taxes, rather than by destroying our targeted welfare system. But I’m not sure they’ve considered how big the increase would need to be.

“Suppose we wanted the universal basic income to be the same amount as the single age pension (currently $23,000, including supplements). That would require an increase in taxes of $17,000 per person, or around 23 percent of GDP. This would make Australia’s tax to GDP ratio among the highest in the world.”

Liberal Senator Eric Abetz described Di Natale’s plan as “economic lunacy”.

“Its catastrophic impact would see the biggest taxpayers in Australia, the banking sector, become unprofitable and shut down and his plan for universal taxpayer handouts would see our nation bankrupted in a matter of years,” Abetz said.

“This regressive and ultra-socialist approach of less work, higher welfare and killing profitable businesses has been tried and failed around the world and you need only look at the levels of poverty and riots in Venezuela.

“Senator Di Natale must explain… who will pay for this regressive agenda when he runs out of other people’s money.”

Despite this criticism, welfare groups said they welcomed a conversation on a “decent income for all”.                                                                

Dr Cassandra Goldie, the CEO of the Australian Council of Social Service, indicated that a UBI would be discussed among their member organisations.

“We are very glad a decent income for all is being discussed. Too many people lack the income they need to cover even the very basic essentials such as housing, food and the costs of children,” Goldie told Pro Bono News.

“We will be discussing basic income options with our member organisations.

“Our social security system has a job to protect people from poverty and help with essential costs and life transitions such as the costs of children and decent housing. It is failing at this. The basic minimum allowance for unemployed people is just $278 per week.

“Budget cuts – including the freezing of family payments – have made matters worse.”

Goldie said that working out if a basic income proposal would increase or reduce inequality depended on the detail.

“We don’t oppose universal payments on principle, but reform of social security should begin with those who have the least. This must be the first priority,” she said.

“The principle that everyone should have access to at least a decent basic income is a good starting point for reform. Let’s have that debate.”

The convenor of the Anti-Poverty Network SA, Pas Forgione, told Pro Bono News that a UBI would only address inequality if payments were set to an adequate level.

“If universal basic income means that everyone gets the same income that people on Newstart gets, roughly $260 a week, then I don’t think that’s going to do much to alleviate poverty,” Forgione said.

“It needs to be set at an adequate level. And I think that involves looking at what it takes to have a reasonable standard of living and a reasonable quality of life in a country like Australia. So it depends on the details.

“If it is set at an adequate level, than it would be a terrific thing for the quality of life for a number of very low income people. I’m not saying that it’s a panacea… but I think you could make a very strong case for looking at a UBI.”

Di Natale’s speech also called for the creation of a nationalised “People’s Bank”, to give more people access to affordable banking services and to add “real competition” to the banking sector.

“A people’s bank, along with more support for co-operatives and mutuals, would inject some real competition into the banking sector,” he said.

“We have a housing crisis that has been created by governments.

“So now is the time for government to step in: through a People’s Bank, by ending policies skewed in favour of investors like negative gearing and the capital gains tax discount, and through a massive injection of funds for social and public housing.”

Source: By Luke Michael | Probono Australia

 

U.S. Home Ownership Rate Slips Versus Other Developed Nations

https://s-media-cache-ak0.pinimg.com/564x/42/0e/8d/420e8d69c3a0b9e5aa2f5ce7d261e01d.jpgVersus other developed nations, the United States is losing ground in terms of the rate of home ownership, new research finds. 

Compared to 17 other first-world countries around the globe, the U.S. home ownership rate has fallen over time, an indicator that the American Dream is becoming less attainable, according to research published by the Urban Institute.

Researchers Laurie Goodman, vice president for housing finance policy at the Urban Institute, and Chris Mayer, professor of real estate at Columbia Business School and CEO of reverse mortgage company Longbridge Financial, prepared the findings.

Among the 18 countries for which home ownership was considered, the U.S. ranked 10th in 1990 with a 63.9% home ownership rate compared with its ranking of 13th in 2015. Several European countries followed a similar shift, with Bulgaria, Ireland, and the United Kingdom seeing slides between 1990 and 2015; the proportion of homeowners also declined in Mexico over that span.

Thirteen of the countries saw increases in their rate of home ownership, including a 39.6% spike in the Czech Republic and a 29.6% gain in Sweden. 

“While cross-country comparisons are difficult, the slip in US home ownership relative to the rest of the world, and the historically low home ownership rates for Americans ages 44 and younger, should motivate us to look at US housing policies,” the researchers wrote in a blog post on the research published by the Urban Institute. 

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Home ownership among the senior demographic has been touted within the reverse mortgage industry as a clear retirement windfall.

Yet even for those who choose not to tap into their home equity, the option to use the property rent-free once the mortgage is paid can play an important role in retirement savings, the researchers noted in discussing the amount of home equity currently held among seniors in European countries.

By Elizabeth Ecker | Reverse Mortgage Daily

Breaking: HUD To Raise Premiums, Tighten Limits On Reverse Mortgages

The Department of Housing and Urban Development on Tuesday will formally announce plans to increase premiums and tighten lending limits on reverse mortgages, citing concerns about the strength of the program and taxpayer losses.

Mortgage insurance premiums on Home Equity Conversion Mortgages will rise to 2% of the home value at the time of origination, then 0.5% annually during the life of the loan, The Wall Street Journal reported Tuesday morning. In addition, the average amount of cash that seniors can access will drop from about 64% of the home’s value to 58% based on current rates, the WSJ said.

“Given the losses we’re seeing in the program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,” HUD secretary Ben Carson told the WSJ via a spokesperson.

The HECM program’s value within the Mutual Mortgage Insurance Fund was pegged at negative $7.72 billion in fiscal 2016, and the WSJ noted that the HECM program has generated in $12 billion in payouts from the fund since 2009. The value of the HECM program fluctuates over time, however: In 2015, the reverse mortgage portion of the fund generated an estimated $6.78 billion in value; in 2014, the deficit was negative $1.17 billion.

Unnamed HUD officials told the WSJ that without this change, the Federal Housing Administration would need an appropriation from Congress in the next few years to sustain the HECM fund. The officials also said that the drag created by reverse mortgages has prevented them from lowering insurance premiums on forward mortgages for homeowners.

“You have this cross-subsidy from younger, less affluent people who are trying to achieve homeownership,” HUD senior advisor Adolfo Marzol told the WSJ.

The move took the industry by surprise, with the WSJ reporting that leaders were not briefed on the changes beforehand. 

By Alex Spanko | Reverse Mortgage Daily

Seniors Only Keeping < = 75% Of Social Security After Medical Expenses

Concerns over the future of Social Security play a starring role in American seniors’ overall retirement uncertainty — and that’s before considering how much of the benefit might eventually need to go toward unexpected medical expenses.

After factoring in supplemental insurance premiums and other uninsured health costs, the average retiree only takes home 75% of his or her Social Security benefits, according to a new study from researchers at Tufts University and Boston College.

“A substantial share of other households have even less of their benefits left over,” researchers Melissa McInerney of Tufts and Matthew S. Rutledge and Sara Ellen King of BC wrote.

In fact, for three percent of retirees, out-of-pocket health expenses actually exceed their Social Security Old Age and Survivors Insurance (OASI) benefits, the team concludes.

These findings are part of an overall trend: Despite positive steps such as the introduction of Medicare Part D coverage for prescription drugs in 2006, seniors have increasingly paid more for health expenses directly from their pockets.

“Until a slowdown during this decade, out-of-pocket costs for Medicare beneficiaries rose dramatically — costs increased by 44% between 2000 and 2010 — and they are expected to continue to rise faster than overall inflation,” the researchers wrote.

To perform their study, which was introduced at the annual Joint Meeting of the Retirement Research Consortium in Washington, D.C. last week, the team analyzed individual data points for Social Security recipients aged 65 and older between 2002 and 2014. They found a wide range in medical spending among that cohort: For instance, while the median retiree spent $2,400 in 2014, the total group averaged $3,100 per person, with retirees in the 75th percentile logging $4,400.

The researchers also warn that they only analyzed medical expenses, citing a 2017 paper that concluded that housing costs, taxes, and “non-housing debt” eat up about 30% of a retiree’s income.

“Although out-of-pocket medical spending has declined somewhat since the instruction of Part D … these findings suggest that Social Security beneficiaries’ lifestyles remain vulnerable to a likely revival in medical spending growth,” the team concludes.

Read McInerney, Rutledge, and King’s full findings here.

By Alex Spanko | Reverse Mortgage Daily

A Look At Our Older Population, Higher Interest Rate Trend

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The United States of America, 2047: The population bumps up against 400 million people, with a full 22 percent of folks aged 65 and older — or 85.8 million seniors. The national debt rises so high that the country spends more money on interest payments than all of its discretionary programs combined, a scenario that’s never been seen in a half-century of tracking such metrics. And that’s all assuming that elected officials even find a way to keep Social Security and Medicare funded at their current levels.

This stark vision comes courtesy of the Congressional Budget Office and its most recent Long-Term Budget Outlook. The nonpartisan CBO looks into its crystal ball and predicts the economic picture for the next 30 years, and the results could prove fascinating for folks who work in financial planning and lending — or, perhaps, send them screaming into the night.

Interest Rates Creep Higher, But Not Historically So

For instance, the CBO joins the chorus of other financial analysts by projecting steady increases in interest rates over the coming decades as the economy improves and the Federal Reserve moves away from the historically low federal funds rates instituted during the depths of the Great Recession. But mirroring the attitudes of many in the reverse mortgage industry after the Fed last hiked its interest rate target back in March, the office also puts these trends in the larger context of recent history, 

“CBO anticipates that interest rates will rise as the economy grows but will still be lower than the average of the past few decades,” the report notes. “Over the long term, interest rates are projected to be consistent with factors such as labor force growth, productivity growth, the demand for investment, and federal deficit.”

As RMD reported at the time, rising interest rates have diverse effects on Home Equity Conversion Mortgage originators and lenders, potentially hampering needs-based borrowers with lower principal limits, but also providing opportunities to market the growing HECM line of credit and strengthening the HECM-backed securities market. 

Though the CBO doesn’t address specific numbers for federal funds rate targets, the office offers projections for the interest rate on 10-year Treasury notes, predicting a rise from 2.1% at the end of last year to 3.6% in 2027 and 4.7% in 2047. That’s still a percentage point below the average of 5.8% recorded between 1990 and 2007, a period that the CBO notes was free of major fiscal crises or spikes in inflation.

The current federal funds rate target of 0.75% to 1% still falls on the historically low side of the spectrum; prior to the economic collapse in the late 2000s, the number sat at 5.25%, and it climbed as 20% during the inflationary malaise days of the Carter and early Reagan administrations.

Rising interest rates could spell bad news for the federal government, however, as they also determine the amount of money that Uncle Sam must pay on his debts. According to the CBO’s estimates, the amount of federal debt held by the public will balloon to 150% of the gross domestic product, up from 77% now — reaching figures never seen in the history of the United States. For reference, the national debt has only ever exceeded GDP during and after World War II, when the government embarked on an unprecedented defense spending spree.

A Changing Population

In the CBO’s estimate, a variety of factors will conspire to expand the American population to about 390 million as compared to around 320 million today — while simultaneously making it grayer.

The net immigration rate, which balances out the amount of people leaving and entering the U.S., is expected to rise ever-so-slightly from 3.2 per 1,000 in 2017 to 3.3 per 1,000 in 2047, while the fertility rate for folks already in America will sit at an average of 1.9 births per woman for the next 30 years, down from the pre-recession level of 2.1.

Couple that with declines in mortality rates and gains in life expectancy, and you’ve got the recipe for an older America: A baby born in 2047 can expect to live an average of 82.8 years according to the CBO’s estimates, compared with 79.2 for children born this year. And good news for readers born in 1982: You can expect an average of 21.5 more years on this mortal coil once you turn 65 in 2047, as compared to 19.4 more years for those celebrating their 65th birthdays by the end of 2017.

The Takeaway

Interestingly, the CBO notes that it bases its entire report on the assumption that the two key pillars of Social Security and Medicare will remain funded “even if their trust funds are exhausted” — a formidable “if” given political realities and the general pitfalls of making assumptions about the future of government from 30 years out.

As Jamie Hopkins, an associate professor of taxation at the American College of Financial Services, recently told a HECM industry event, Social Security and Medicare will remain funded through 2034, and any attempts to make unpopular decisions that could benefit their long-term health — such as raising the retirement age — would spell political disaster for those who attempt a change.

Perhaps none of this comes as a surprise to originators, lenders, and others who work in the reverse mortgage space: Americans as a unit are getting older, the economic outlook remains uncertain, and no one’s really sure what’s going to become of the social safety net. Meanwhile, down on the micro level, this growing crop of seniors will need to figure out ways to remain comfortable and safe in their retirement years.

By Alex Spanko | Reverse Mortgage Daily

Hail Mary Retirement Plans for Those With Nothing Saved

Are you rounding the corner toward retirement age with not nearly enough set aside?

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We tell young people to start saving for retirement from their first job and not to quit, because even small sums can grow staggeringly large with enough decades of compound returns. But maybe you bumped along from paycheck to paycheck, never saving much. Or maybe you tried to save but got slammed with unexpected setbacks like a late-in-life job loss.

Let’s be clear: You can’t make up for lost time.

But don’t give up — you do have options. Any money you can set aside can help you make retirement more comfortable. Here’s what you need to do:

REDEFINE RETIREMENT

This means working longer, working part time in retirement or both. You’ll have more time to save, your savings will have more time to grow, and you’ll shorten the full-retirement period you’ll need to cover. That’s a nice way to say you’ll have fewer work-free years before you die.

If working longer in your current job feels like a death sentence, start looking around for paying gigs you might enjoy in retirement. Working longer may have an upside: People who voluntarily work in retirement often say their jobs keep them active and engaged.

If you start taking Social Security benefits before your full retirement age–which is currently 66 and rising to 67 for people born in 1960 and later– the “earnings test” will reduce your benefit by $1 for every $2 you earn over a certain limit ($15,720 in 2016). That reduction will end when you hit full retirement age.

DELAY SOCIAL SECURITY

The benefits of waiting are so great that it may be worth tapping whatever retirement funds you have so you can hold out until your full retirement age. If you sign up at age 62, you’ll lock in a permanently reduced check.

Most people are better off delaying their application at least until their full retirement age, currently 66 but rising to 67 for people born in 1960 or later. That would inflate a $1,500 monthly benefit to at least $2,000. If you waited until age 70, when benefits max out, the same check would grow to about $2,640 each month.

If you’re married, it’s particularly important for the higher earner to put off applying for as long as possible. When one of you dies, the survivor will get the larger of the two benefits you received as a couple. Maximizing that benefit can help keep the survivor’s final years from being a financial nightmare.

Rule of thumb: Every year you wait past age 62 adds about 7 percent to 8 percent to your eventual benefit.

TAP THE HOUSE

If you have substantial home equity, you have a powerful asset to deploy for your retirement. You can:

—Downsize now so you can invest the money freed up from the sale and from lower housing costs. The big advantages to doing it now: Your money will have more time to grow, and you may be better able to handle the disruption of a move than when you’re older.

— Downsize in retirement, when you can relocate someplace with a lower cost of living. Your job may require you to live in an expensive area, but once you retire you can choose to live somewhere cheaper within the States or, as about 1 million U.S. retirees do, abroad.

—Consider a reverse mortgage . Reverse mortgages can give you a lump sum, a stream of monthly checks or a line of credit you can tap as needed. You don’t make payments, but the debt grows over time and is paid off when you move, sell or die. The earliest you can apply is 62, but the longer you wait, the more money you can get.

New Jersey resident Walt Lukasik, 60, is investigating this option to salvage retirement plans that were upended by his wife’s cancer diagnosis 15 years ago. She hasn’t been able to work for the past eight years, and medical bills have sucked away any money they’d hoped to save, Lukasik says.

The combination of care giving and worrying about retirement is taking its toll. “It’s killing me,” he says.

If he applies for a reverse mortgage in two years, it could pay off the $75,000 balance on their current mortgage and give them a monthly payment of about $390, according to the National Reverse Lenders Mortgage Association. If he waits until the mortgage is paid off in five years, the monthly payment would be closer to $800. Other payout options include a lump sum of $93,000 or a line of credit of more than $160,000.

Reverse mortgages are complex and can be costly, so they’re not a good fit for every situation. Counseling is mandatory and typically provided by nonprofit credit counseling agencies.

TURN TO YOUR KIDS

Most U.S. parents are horrified by the notion of asking their children for money. Their kids often don’t feel the same way. A recent survey by Fidelity Investments found nine out of 10 parents think it would be unacceptable to become financially dependent on their offspring, but only three out of 10 adult children agreed with them. If there’s any chance you may need your children to help you make ends meet, consider having the conversation sooner rather than later. Bringing up the issue may be painful and embarrassing. But at least you’ll know whether you can rely on their help, and they will have time to rearrange their finances to better offer it — while, of course, saving for their own retirement.

EXPLORE PUBLIC BENEFITS

If worse comes to worst, Social Security alone can keep you above the poverty line — that’s why it was invented. You also may qualify for public benefits, such as subsidized housing, food benefits and lower-cost utilities. Start your search at Benefits.gov.

RE-EXAMINE YOUR DEBT

If consumer debt such as credit cards, medical bills and unsecured personal loans totals half or more of your gross income, explore your debt-relief options, including talking with an experienced bankruptcy attorney. You may be better off saving that money than using it to chip away at debt you can’t ultimately repay.

SAVE, SAVE, SAVE

You don’t need a fortune. You do need a way to deal with an emergency or the flexibility to time your benefits better. Anything you can save will give you more choices in retirement. Having $10,000 in a savings account could pay for a new furnace or an unexpected medical bill. Boosting your savings more could allow you to delay Social Security or the start of a pension to get bigger checks.

POWER SAVE

This option is a long shot, but it may work for those with sufficient income to make a last, aggressive push to save for retirement.

You may be able to save a big chunk of your income if you’re entering the empty nest years and can funnel into retirement accounts money that you used to spend on raising and educating kids. Or maybe you’re just determined to slash expenses and buckle down to serious saving.

Let’s say you earn around $45,000. According to Social Security, your benefit at full retirement age will replace roughly 40 percent of what you make, or about $18,000 a year. Saving 20 percent to 30 percent of your income during your last 15 years of work could give you a nest egg big enough to prevent your lifestyle from falling off a cliff in retirement. (This assumes that you can manage a 6 percent average annual return, inflation averages 3 percent and that you’ll live on about 60 percent to 70 percent of your pre-retirement income for 20 years.)

If you’re able to pull this off — and that’s a big if — you can go a long way toward closing the retirement gap.

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| New York Times