Do you have a clearly defined plan to handle any potential Long Term Care needs you may have? Have you been taking advice regarding long term care from your friends, neighbors, family, or financially based TV or radio shows? Well doing nothing about it is very irresponsible of you, maybe even childish, and listening to the advice of people that are not experts in something so important is likely unwise.
When you don’t have a clearly defined plan for long term care, it will likely fall back onto your family, the government, or a combination of the two. If it falls onto your family there are some very disturbing things to know about the impact it will likely have on your family.
Realizing that there’s nearly a 50% chance a 65 year old will eventually require 24 hour skilled nursing care in a facility, today’s semi-private room costs are more than $66,000 and growing at 6% per year it would be $149,219 in 15 years, are you willing to plan ahead now or risk disaster later? Mature planners realize that if care is needed, the emotional grief will be hard enough. There’s no need to put your loved ones in a financial bind too.
It’s sad that many fall into these situations, especially when so many could use their biggest asset to ease the burden off their loved ones while also getting them better treatment with more options, including staying in your own home. Too many seniors listen to well meaning yet ill-informed people that tell them you can’t do that or it’s too expensive or that’s a rip off so they just turn a blind eye to a potential way to handle all those concerns and still deliver a sizeable inheritance to their children.
If you would like more information about how to protect your family and get the care you may need and how Reverse Mortgages can help contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar “Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?” They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.
The great unknown for all of us will we need to be cared for in our later years? A Gallup poll said 76% of Americans believe they will never need nursing home care, assisted living or any other long term care service.
Unfortunately, the reality of the situation paints a much different picture. Life expectancies are up. According to the Center for Disease Control in 2004 the life expectancy for a 65 year old male is 82.1 and a 65 year old female is 85. So if you make it to retirement age the chances of living a long life are very good.
A study done by Conning and Company estimate 6 in 10 of people who reach 65 will require some form of long term care. That is a 60% chance you will need some form of long-term care, yet at last check only 5% of those 65+ have long term care insurance. Well folks if you don’t have long term care insurance then you are planning on paying for it out of pocket, or you are counting on your kids to take care of you or maybe you think Medicare and/or Medicaid will take care of you.
Nursing home costs today for a semi-private room runs $66,795 annually, if it grows at 5% per year in 15 years its $141,184 per year. Nursing home stays range from 16 months for cardiac events to 96 months for Alzheimer patients. That’s a total cost of $1,348,000 if you self fund it. If your kids take care of you that type of care is pretty much 24/7. What toll will that take on them?
So many just think Medicare and Medicaid will take care of them. If you believe that do some research and see what you’ll find. Medicare handles short term things, really nothing more than 90 days. It does NOT handle custodial care in a nursing home, non-medical in home care, adult day care or assisted living.
Medicaid is basically welfare. You have to spend down any significant assets before Medicaid kicks in. You can keep your house, but don’t think you will get your equity out of it. Medicaid will put a lien on it if your spouse still lives there otherwise it may have to be sold to pay for your care. So don’t think that your house is protected- it is NOT!
So if you are thinking about sacrificing your care to leave the house to the kids, planning on Medicaid is probably not the way to go. There are a lot more reasons to look at other options for your potential long term care, but it would be impossible to address all of them in one article. Please just realize that Medicaid is not the only way to go you could have more, better options.
If you would like more information about long term care options through Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar “Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?” They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.
One of the biggest concerns of seniors in Kansas City is having an emergency fund that they could easily tap if needed. Many feel it would give them additional security and more importantly peace of mind so they can sleep better at night.
What if there was a way to have an emergency fund or nest egg that is “GUARANTEED” to grow tax free every year? (The 20 year average growth rate is 6.54%) Would that give you the peace of mind to allow you to sleep better at night?
Imagine living your “Golden Years” without the stress of living with the “what if’s” of life. What if I have a medical emergency? What if my car breaks down and needs major repairs? What if I need to make modifications to my house to allow me to continue living here? What if? I’m sure there are many more.
Assuming you had $100,000 currently available to you, if it grew at the 20 year average of 6.54% and you didn’t need the money for 20 years you would have upwards of $368,000 available to you. Would that give you peace of mind?
The next question is where do I get the $100,000, right? Well chances are you are sitting on it. Your house! I know that’s taboo to mess with the house, right?
So let’s say you have a $180,000 house that appreciates at 3% a year and in 20 years you needed a bunch of money. The house would be worth $325,100 and who knows what the real estate market would be at that time so let’s assume you would net 90% selling it. That’s $292,590, but where would you live?
Where getting a $100,000 reverse mortgage letting it grow (assuming 6.54% 20 year average) you would have access to $368,000 vs. $292,590 or about $75,000 more money AND you could still live in your house for life with no payments.
Another option, if you could qualify for a loan, you could get maybe 80% of that $325,100 house that’s $260,080, but you would have a HUGE payment to stay in the house (at 6% it would be $1,559.30). You could get a reverse mortgage at that time, but that amount would be less than any of the other options. Depending on guidelines at that time it wouldn’t be any more than about 75% of the value minus closing costs.
So the “fall back” plan of using the equity in your house either through selling or getting a loan when you likely would have trouble qualifying and even more trouble making house payments gives you MUCH less than getting things set up right now. Bet you didn’t know that did you?
Well, if you would like more information about the options involving Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar “Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?” They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.
One survey said 80% of seniors want to stay in their home for the rest of their life. Really, only 80%, I would have thought it would be 100%. Is staying in your home for the rest of your life important to you?
If it is then continue reading.
Staying in your home for life is much tougher to do now that it was for your parents or grandparents. Life expectancies are up- a 65 year old woman has a life expectancy of 83 and a 90 year old today is expected to live almost another 8 years. With that longer life expectancy comes a much better chance we will need some type of long-term care.
Historically the term “long-term care” (LTC) meant nursing home care. That is not the case today with the advent of in-home care and assisted living. So when you hear “long-term care” it includes all of the above. One study showed that there’s a 60% chance we will require some type of LTC, and if we are going to live longer it makes sense that the length of time we might need LTC could be extended.
There are different schools of thought regarding LTC. One is to self-insure which means you feel you have enough assets to pay for it as long as you need it. The next is to buy LTC insurance, but so many feel the premiums are too expensive to afford in retirement. The last school of thought is to depend on the government- Medicare and Medicaid.
If you are looking at the last one, please rethink that plan. If you think that’s the only way you can go talk to someone that knows more about other options. When was the last time you heard someone say how good their experience was with the care they received thru Medicare or Medicaid?
What if there was a way for you to prepare yourself for the possibility of LTC that would allow you to stay in your home for as long as possible, have no mortgage payments for as long as you are in the house, while you are in the house you never give up ownership, and it didn’t impact your monthly expenses at all, would that interest you?
If you think that sounds pretty good to you then you need to look into some of the advanced strategies involved with Reverse Mortgages. These are strategies that very few even know about.
If you would like more information about Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar “Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?” They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.
The stock market is in Bear territory and the cost of just about everything is up. Are you like millions of seniors that are finding themselves dipping into their savings more than they planned to at the worst possible time- when their accounts are taking a beating?
What is it doing to your retirement plan? Are you now even more concerned that you could run out of money before you die? Will you have to cut back on your spending and thus your lifestyle or worse yet go back to work? I know, I know you already know that and I’m just throwing salt in the wound, but before you stop reading there may be a way to help you weather this storm.
For many seniors there is one big asset that tends to be overlooked due mainly to a lot of misconceptions, incorrect information and outdated thinking. That asset is the house. Whoa, I know, “hands off,” “don’t touch my house,” “that’s off limits!” That’s what I mean by misconceptions, incorrect information and outdated thinking.
So many cling to outdated information that was created 50, 60 even 70 years ago and folks I don’t know if you’ve realized this or not, but the times are much different in 2008 than they were in the 1950’s, 60’s, 70’s etc. Different times calls for different measures!
Would the ability to access “tax free” income when you needed it be a benefit to you? If you didn’t need the money the amount available could grow each month (the 20 year average annual growth rate is 6.54%), the growth is tax free and not directly tied to the stock market. Does that sound intriguing?
Would it be smarter to pull “tax free” money out of an investment that is not declining in value, but is guaranteed to grow every year when your taxable accounts are getting hammered by a poor stock market environment? Would it be better to leave those accounts alone rather than depleting them as the market is depleting them already?
If you answered “yes” to any of those questions then you need to look into the merits of a Reverse Mortgage. Yes that’s right I said “Reverse Mortgage,” it’s not a four letter word. It’s actually what I would call the MOST overlooked financial tool in all of retirement planning.
Even though so many seniors in Kansas City struggled their working years trying to pay off their homes, many failed to accomplish that goal. To compound the problem these same folks didn’t have a clearly defined savings plan for their retirement years. So now they are in their “Golden Years” and aren’t able to enjoy retirement.
Too many seniors are struggling financially because they still have a mortgage payment. Making matters worse is the fact that inflation has been making living much more expensive. All you have to do is look at the pump, the prices at the grocery store, your utility bills and the costs of your prescription drugs to know where their dollars are going.
Many are having to stay on their jobs longer or go back to work. They are dreading the beginning of the month because they know all those bills will come due again and they just can’t make ends meet.
What if you could eliminate the mortgage payment while having the ability to stay in your house for as long as possible? What if you could pay off the mortgage and have an emergency account to give you Financial Peace of Mind? What if you could pay off the mortgage, have that emergency account AND have some additional income to help you not only pay your bills but have some additional spending money? Would any or all of those things make your life more enjoyable?
If your answer to any of those questions is “Yes” then you need to check out the merits of Reverse Mortgages. Contrary to what the media and so called “experts” would have you believe about them a recent study revealed that 93% of seniors that have gotten Reverse Mortgages are happy with them. That’s quite an approval rating, don’t you think?
Ever since the Great Depression the goal of just about every homeowner was to pay off their house as fast as possible. It was thought to be a sign of success because it kept the house safe from foreclosure, having no payment is really the only way to live in retirement and the goal of leaving something to the kids.
All are fine goals, but why then do so many seniors in Kansas City with paid off houses struggle monthly to pay their bills, eat and buy their prescription drugs? You see it all the time and thanks to the recent spikes in food costs, fuel costs, electricity costs, property taxes, and skyrocketing drug prices it has become even more prevalent.
Research shows that so many that focused on paying off their homes early failed to implement a clearly defined savings plan. It also appears that many felt between pensions and social security they could make it easily in retirement. The problem there is that pensions are dwindling quickly, healthcare coverage even faster and social security which was designed for a third of one’s retirement is now the ONLY retirement for many.
To recap, many seniors struggled for years putting any extra money they had towards paying off their house. So much so, they didn’t have much if any other money saved and now what they thought the government and their employers would provide in retirement haven’t come to fruition. Therefore, they are living their “Golden Years” struggling to survive having to decide between eating and buying their prescription drugs. All the while they are sitting on their largest asset and not utilizing its power.
If you had a $100,000 in a mutual fund and you couldn’t afford groceries and your prescription drugs each month would you just leave that money in the account? Or would you tap into it to get by each month?
Why should your house be any different? I mean if there was a way to access a majority of that money WITHOUT the fear of losing your home or ever having to make a mortgage payment why wouldn’t you?
Is having a paid off house while you are struggling every month to eat and pay bills, much less do anything enjoyable your definition of “Success?”
If you would like to explore a different way that could help you pay your bills, eat, get your prescription drugs AND do some of the things that you enjoy then you should look into the merits of a Reverse Mortgage.
Another option given by the media and other financial advisors to the question of how can seniors in Kansas City make ends meet in retirement is to sell their house and rent something smaller.
Assuming you have an $180,000 house if sold would net 90% after selling costs and seller concessions that would leave you with $162,000. If that was invested into a conservative investment that earned 5% after taxes and the strategy is to use that money to pay the rent every month plus pull out the amount the taxes and insurance would have been on the house.
If you rented a place at $800 per month it would likely be much smaller than the house that you had and you would have missed out on any appreciation on the house. The idea behind this is that you can’t afford your house which would have about $260 in taxes and insurance each month. If we assumed that rent and house costs go up the same 4% annually how long would that $162,000 last?
Since you would only do this to pull extra money out, let’s assume the amount you were paying on the house each month $260 is taken in additional income adjusting for inflation. In 5 years that amount would be $304.16, 10 years $370.06, and in 20 years $547.78.
The question we ask is how long could you pay rent and pay yourself the equivalent of what your house would have cost? The answer is 19 years and 1 month. So selling and renting in this situation would give you 19 years and one month before you ran out of money. Granted you had income too, but isn’t that the only reason you would do this plan and would $260 to $547.78 a month make that big of a difference in your life?
What is the media’s plan or the financial advisors plan on where you would live if you live longer than 19 years and 1 month? They didn’t think about that did they?
Comparing a reverse mortgage at the age of 62 you could take a life time income of $559 and never have to make another payment on your house for life. That is $559 beginning right away which pays your taxes and insurance on the house for more than 20 years if you spent the amount over those costs.
Or if you took a lump sum of $100,127 and invested it at 5% took enough money out to pay your housing costs and the same amount in income it lasts for 25 years. That’s almost another 6 years and you can still live in your house after that because there are no payments.
Please realize these are simplistic examples and there are other factors to consider. The goal here is to open your eyes to other possibilities and to let you know that the media and even financial advisors can be way off base on their blanket recommendations. The best way to decide what is best for you is to consult with professionals that have taken the time to thoroughly analyze options.
There are many options to consider when seniors in Kansas City are trying to make ends meet in retirement. Selling and buying something cheaper is one of the options that many including The Financial Industry Regulatory Authority (FINRA) tells you to consider.
Let’s see if this is a “good” option. Let’s assume you have a $180,000 house, you want to sell and buy a $90,000 maintenance provided townhome. Your costs to sell are likely to be at least 6% for real estate commissions, plus typical seller’s costs, plus any closing costs the buyer may request paid and do you think you will get full asking price? Let’s say you get 90% or $162,000.
You pay $90,000 for the townhome, plus $3,000 for closing costs, $2,000 in moving costs so the net is $67,000. The taxes and insurance on the townhome are $170 per month and the association fees are $250 for a total of $420 per month.
So you have paid $18,000 to sell the property, plus another $3,000 in closing costs and $2,000 to move you- that’s a total cost of $23,000. That doesn’t take into account the lost opportunity cost of investing that $90,000 and $23,000 ($113,000). Investing $113,000 at a 5% after tax for 5 years is a total of $145,000, 7 years $160,238, 10 years $186,112, 15 years $238,848, 20 years $306,528, and 30 years $504,855.
Investing the $67,000 at an after tax 5% would pay that $420 for 263 months (22 yrs 11 months). Or you could take $500 per month for 196 months-16 yrs 4 months, $750 for 112 months- 9 yrs 4 months, $1,000 for 79 months-6 yrs 7 months.
What if instead at the age of 62 you took out a reverse mortgage with closing costs around $10,000 your line of credit (LOC) would be $100,172. You wouldn’t have to move, you have no mortgage payment, but you would have to pay about $260 for taxes and insurance let’s say another $150 a month to have the yard cared for so the total is $410. (Comparable to the townhome). The costs are only $10,000 vs. $23,000 to move plus you have to move and you are in a much smaller place.
The LOC has a growth function on the open amount and the 20 year average growth rate is 6.54%. So the LOC would have $138,795 available in 5 years, $158,134 in 7 years, $192,310 in 10 years, $266,460 in 15 years, $369,199 in 20 years, and $708,791 in 30 years.
If you assumed the $180,000 house grows at 3% each year, and the net from the house would be 90% when it sold; in just 15 years the amount available in the LOC is $259,081 while the net from the house is $252,390. That is $6,691 MORE from the LOC. So getting a reverse mortgage with a LOC and letting it grow assuming the 20 year average you could cash it out at that time and give the kids more than they would have gotten if they went through the hassle of selling the house. Interesting isn’t it?
Funny the media and FINRA didn’t mention that when they tell you to sell and buy something cheaper. Before you dismiss something because the media or a “so called” expert tells you something you should get with a true professional and discover for yourself what is the best and cheapest way to go.
Kurt Jackson is a Certified Mortgage Planner with more than 17 years in the industry with an office in Liberty. If you would like to find out more about other options to your retirement years call him at 816-415-1737 or email kurt@kcmortgageplanning.com.
Seniors in Kansas City Are Reverse Mortgages Too Good To Be True?
Advertisers attempt to make you think they are all that and then some while the media and some financial advisors make them sound like they are a horrible way to go. Let’s see if we can help you decide for yourself.
Reverse mortgages are for homeowners 62 years or older that either have their home paid for or have a mortgage balance 50% or less of the value of the house. Reverse mortgages work opposite of traditional loans. On traditional loans you make payments every month on reverse mortgages the bank pays you monthly, or in a lump sum, or a line of credit or a combination of those options. The bank does NOT own the house you maintain title just like any other loan.
As long as you keep your property taxes and home insurance paid, keep the house maintained, don’t change who is on title, rent out the house, or try to get another loan on the house the reverse mortgage requires no repayment until you either die or move out of your house for more than 12 months. The loan can be paid off by selling the house or liquidating other resources to pay it off and if the loan exceeds the value of the home you can just let the bank take the home. You or your heirs are never obligated to pay back more than the house sells for.
The costs to do a reverse mortgage include your typical mortgage costs including appraisal, title, lender fees, recording fees, closing fees. The lender is generally compensated through the paying of points which are capped at two. Lenders can also be compensated through a higher interest rate via a higher margin on the adjustable rate mortgage. So you can lower your upfront costs by accepting a higher rate just like in traditional mortgages. The last cost is a 2% mortgage insurance premium.
The mortgage insurance premium pays for all the features this loan has that a traditional mortgage does not have. When that is taken into consideration that fee insures the very things that make a reverse mortgage so attractive. The interest rate you pay includes a .5% annual mortgage insurance premium.
One of the biggest issues many have with reverse mortgages is that the interest accrues daily and does compound. Which makes perfect sense since one is not paying interest payments. If you stay in the house for a long period of time and house values don’t appreciate much or at all then there is a very good chance you will owe more than your house is worth, which would mean your heirs would likely let the house go back to the bank. If appreciation keeps up then when the house would be sold, the loan is paid off and the remainder would go to you or your heirs.
All in all reverse mortgages are NOT too good to be true. They do exactly what they say they do, but there are some downfalls to them, which we have begun pointing out. Reverse mortgages can help seniors in Kansas City and it is up to you to find out if one would be prudent for you in your situation.
There are many more advanced strategies utilizing reverse mortgages for retirement living, if you would like to get more information contact Kurt Jackson, he is a Certified Mortgage Planner with more than 17 years experience and can be reached at 816-415-1737 or email him at kurt@stayinyourhomekc.com.
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