In certain circumstances, reverse mortgages can be a very good solution for folk who want to stay in their home, and have a support system for themselves, i.e. local family, that will make staying in their home a reality, not a dream, if they get sick or need long term care.
But the cost of the financing internally in reverse mortgages are sure not three or four percent, likely at least double that.
If one has little cash, it is a viable option, but all the downsides really need to be understood.
http://mashable.com/2013/03/02/wealth-inequality/
I just saw this video, released this month, which is pretty depressing for seniors, and frankly, most of us. Sure the American way is to be a billionaire, for some..., some of the rest of us just want to be healthy and happy with adequate income.
But the disparity in wealth in this country is really shocking; yes we have our dot come zillionaires, and lottery winners, and lots more, and yes we want everyone to have the right and ability to earn huge amounts of (taxable?) money, legally, but where does it get society?
None of us want socialism, but are we really ok with the rich get richer and the poorer get poorer? Is this the country we want for today, and for the future?
There isn't any low hanging fruit here...it's all hanging way up high, or perhaps in the Cayman Islands.
I honestly don't know the answer here, but I do know we need to change the reality of this chart, or our ancestors may wind up on the modern version of a guillotine with the "rabble" taking off their heads. Husbands and wives don't want to have to work until they are 80 to be able to afford a modest retirement.
With almost all countries looking for new revenue, I doubt there will be many hideaways for the super rich anymore.
It's not hard to be a millionaire in the U.S.; the challenge is that if you aren't by the time you retire, even if all those assets were liquid,
which they never are, that still means only $40-50K a year from your million dollars. You are a millionaire and you need to live on forty thousand a year. That's a serious wakeup call to many people. Or you just spend it, or whatever you have, faster..., and then you will wind up without a penny in the County nursing home, if you are lucky.
And remember, you can't draw four percent out of your real estate equity each year,
not easy to do simply. And that's where most people's money is, in their homes.
So you might have made your million net worth goal, but you have to sell your home and rent
in order to get the income stream you planned on. Usually not what people want, though lots of retirees
in Sunbelt rentals.
My older brother told me decades ago, just remember two million. Older brothers always know more, so of course I went
yeah, yeah. Then I became a CFP, and my brother wasn't so dumb any more. Actually, as I knew, he was a very bright lawyer.
Two million dollars. Sounds unbelievably large. But if you want to retire in a high expense area, like where I live now, you have to carve out your
home if you want to stay, and live on the balance of your net worth, and that isn't always totally liquid either.
So when the financial advisor tells you you need to save two million dollars to retire on one hundred thousand per year, you can't look at him like he's nuts. Because he isn't.
Which is why I want/need to move in retirement further South, at least to NC. The taxes and cost of living are ridiculous in my area.
Our schools are like junior colleges, complete with granite and I bet ivy in some places. They are temples of education, and all the local parents are sure happy about that. Really good high schools, with top teachers earning well into six figures. And I have no kids.
So for me to retire comfortably, since I don't have two million bucks, or close to it, I need to reduce my cost of living by moving.
That in itself is a big issue in retirement. And if you have a family farm, it gets scary expensive to keep the farm in the family after
the last of the older generation passes away. Most get sold. As did ours. At least we preserved over seventy percent of our farm in perpetuity, feel good about that, but it's another farm that bites the dust, so my generation in the sixties could even consider retiring.
maybe the folks who earn over a million a year really should pay another five percent...
what do you think?
sorry for the length of this. The topic winds me up.
