How to Keep the Housing Crisis from Bursting Your Retirement Bubble

Everyone dreams of that perfect little retirement home in the relaxing tranquility of some quaint town on the shores of something beautiful.  Ahh, yes.  We can picture it now. The feel of a cold drink in our hand and the sun beaming down on our face.  The birds are singing and the waves are lapping at the shore.   Then suddenly, “Pop!” What was that, you say. That was the sound of that dream bubble bursting for the 1.5 million older and retired Americans that have lost their homes to foreclosure along with much of the financial security that came with them.

The reality is that, for many older Americans, their dream scenario has turned into a living nightmare.  Instead of visions of beach houses or lakeside homes, many retirees find themselves clinging for dear life to the homes they have inhabited for years.  The housing crisis knows no boundaries, and it has certainly proved that by inhabiting the lives of many retired and soon-to-be retired individuals.  Unfortunately, the tidal wave of foreclosures continues to splash through the 50+ age group.

The AARP released a report outlining the foreclosure climate in the lives of older Americans and the results were a little frightening.  Over 1.5 million of them have already lost their homes.  Currently, about 600,000 people in the 50+ age group are in foreclosure, while another 625,000 are over 3 months behind on their mortgage payments.  16% of all 50+ Americans currently owe more than their homes are worth.

These numbers are not what many Americans are accustomed to.  The proportion of seriously delinquent loans held by older Americans has risen over 450 percent over the last five years.  Many of these people have gone their whole lives with nearly perfect credit, but have now hit a solid wall of debt that doesn’t seem to be budging.  Things aren’t getting any easier with age.  Among Americans 75 and older, one in every 30 homeowners are in foreclosure.  Five years ago, that proportion was just one out of every 300.  The numbers are hurtling downward at an alarmingly fast rate, and they don’t seem to be slowing.

These statistics are more than just ink on paper.  They are seriously altering the lives of many retirees, forcing some to re-enter the workforce or drastically change the budgets they had planned out years earlier.   Their retirement dreams have disappeared and they are simply trying to stay afloat.

The report showed that younger Americans are struggling as well, but the number of older Americans entering the dreaded foreclosure zone is increasing at a much faster rate.  One of the main questions is simply, “Why?”  Why are so many older Americans falling into trouble?   What’s the problem?

The problem is that many of these people set their budgets and their retirement plans before the economy, well, you know.   Most of them are living on a fixed income and quickly find themselves plowing through their retirement savings.  The income from their investments has been drastically cut, but their house payments have not.  Picture this: the faucet of their main source of income has slowed to a drizzle, but the drain of payments remains wide open.  It doesn’t take a financial expert to realize that it’s only a matter of time before the pool of funds will be completely dried up.

That can be a pretty disheartening image, but the bursting of the housing bubble doesn’t have to burst your bubble of retirement dreams, you simply might have to alter your path to get there.  Planning for these difficulties ahead of time can drastically reduce the struggles you could face.  Many people approaching retirement can analyze their investments based on earnings and interest rates of the current market and forecast their plans more accurately.  It might not be as pretty, but it’s a more realistic picture of what things will look like.

The most important thing is to not be blinded by your dreams, but use them as your vision to create a plan that works for you and your future.  With some planning and a little creativity, you could find yourself livin’ the dream in no time!

http://www.aarp.org/content/dam/aarp/research/public_policy_institute/cons_prot/2012/nightmare-on-main-street-AARP-ppi-cons-prot.pdf

Photo courtesy of: 123RF

The Key to Solving Your Retirement Problems

“There are no guarantees in this life”. That’s what we have always been told, and many people have adopted that mantra into their retirement planning.

In recent years, it seems as if there are no guarantees in retirement investments and retirees are learning that lesson first hand. With pensions seemingly becoming a thing of the past, 401(k) fees rearing its ugly head, and the future of Social Security up in the air, the retirement landscape is becoming more and more questionable every day. With so many uncertainties, there seems to be one “safe” option surfacing more frequently: an annuity.

Annuities are a fundamentally different type of investment from many of the more traditional options. With rising insecurity about the ability to fund a happy and healthy retirement, people are turning to the security of annuities because annuities often solve the most pressing problems and fears that retirees face.

Afraid of Outliving Your Money?

It’s no question that people are beginning to live longer and healthier lives. This news should have people celebrating all the extra experiences they will have and additional memories they will be able to make, but instead they are worrying about how they will afford those extra golden years. The structure of an annuity eliminates worry and allows retirees to focus on how to spend their time instead of how to save their money. Annuity products can provide income to retirees for as long as they live, even if their account balance is zero. This is true even if they enter a nursing care facility; where often times the monthly payments from the annuity will double to help cover the costs of care. This means there is never a threat of outliving a life savings and that allows seniors to enjoy every minute of their retirement.

Afraid of the Market Crashing Again?

Market instability is a fear on the minds of nearly everyone approaching retirement, especially considering the recent beating that many portfolios endured. This is why more retirees are adopting the “fool me once, shame on you, fool me twice, shame on me,” mentality by protecting themselves from another market crash. How are they doing this? Annuities. Annuities are state regulated, so retirees can have security and confidence knowing their money is safe from anything the market will throw at them.

Afraid of Low Interest Rates Stalling Your Investments?

Interest rates have taken a downward tailspin in the past few years, and many retirees are unhappy with the new lower percentages. Annuities defy these depressing digits, giving retirees 6, 8, and even 10% return on their investments. Some people see those numbers and think that it’s not possible, or that pages of fine print are hidden behind those percentages, but more and more people are finding that 10% interest isn’t too good to be true. They can earn 10% interest on their annuity, and have that rate guaranteed for years to come. Gone are the days of having to settle with one or two percent interest on your hard earned money. Annuities offer a way to make your hard earned money work for you.

The anxieties surrounding funding a retirement lifestyle are an unnecessary evil for retirees. Annuities can give you the money, and the peace of mind, that you want so you can enjoy your retirement. The thought that there are no guarantees in retirement is a thing of the past and annuities seem to be the key to the future.

For more information on annuities, click here to receive a free informational booklet in the mail or call 1-877-476-5051 to learn how you can earn 10% interest toward your retirement future today!

Photo Courtesy of: agingoptions.com