Retirement Income Strategies: Investing In A Bad Economy

In order to maintain their standard of living, older homeowners are starting to convert their home equity to monthly income. This is a relative new concept that has become increasingly popular with the development of reverse mortgages. Financial professionals are also beginning to look into different non investing retirement strategies in order to increase income. Today there is a three tiered foundation consisting of savings, pensions, and social security.

Recent trends have indicated that this conventional approach has become less effective. The savings rate among most Americans has significantly declined since the 1980s, reaching its lowest level in 2004. This is the lowest level since the Great Depression, however, recently there has been a slight increase. To compound these shortfalls is the decline of certain benefit plans and without them most families are left without retirement strategies that are sufficient enough to get them by when they stop working. This leaves most Americans to face a future with less income for retirement.

Due to the rising cost of living, many older Americans are finding it harder to make ends meet. Researchers have estimated that approximately 78% of older Americans do not have the proper resources to sustain them in their retirement years. Baby Boomers are also concerned with having the ability to maintain their standard of living during their retirement years. Retirement strategies for older workers who will not have adequate retirement income, or an uncertain source of income such as a defined benefit plan, will be using their home equity to pay for their retirement.

Another option for most older homeowners in order to ensure retirement income, will be to buy a “longevity” annuity using their savings. In combination with their home equity, they will be able to fill financial gaps using their home equity, until they start receiving annuity payments. Longevity annuities only require a small investment unlike immediate annuity, because they do not start paying out until after the age of 80 or 85. This is among the best retirement strategies for older Americans who are concerned that buying an immediate annuity will leave them with insufficient income for meeting unexpected expenses, or to leave a bequest. Consumers need to carefully examine the fee schedule associated with longevity annuities since the can be very expensive.

The best options for retirement strategies are the ones that reduce stress, are the safest options, do not require much on the part of the homeowner, and are the easiest to accomplish. By using the equity in a home and not using available savings or other resources, homeowners can have the best of both worlds.

Retirement Income Strategies: Investing In A Bad Economy