Baby Boomers Retirement Solution

The Sad Truth

If you were born between 1946 and 1964, you are considered part of the most influential generation in American history— the Baby Boomers. You see, after U.S. troops returned from World War II, they quickly settled down and everyone started having lots and lots of babies. This gigantic generation has transformed America as they have passed through each stage of life. Now they are retired or getting ready to retire. In fact, according to the Social Security Administration, starting in 2012 and for the next 19 years, every single day more than 10,000 Baby Boomers will reach the age of 65.

Around thirty 30 years ago, when the Boomers were in their 20s and 30s, the transition of responsibility for retirement savings shifted from the employer to the individual with the development of individual retirement accounts, IRAs and 401(K)s. Initially they were introduced as a supplement to pensions and social security, not a replacement. Yet the change allowed many companies to drop their employer-paid pensions, making individual retirement accounts and Social Security income the primary and often only retirement funding vehicle people have access to.

Boomers were happy to take control of these new programs and opened up new IRAs and 401(K)s with great projections for their retirement savings. With annual contributions and market growth, the individual retirement accounts would provide them with a comfortable retirement.

But to the surprise and misfortune of all the Boomers, the following thirty 30 years brought four historic market crashes that ultimately decimated Boomers’ retirement savings projections.

Thanks to the brutal combination of these past financial crises, along with the rising cost of health care and the dim outlook of our Social Security program, today’s Boomers have a huge financial gap between what they will need in savings and what they actually have to retire on without making drastic lifestyle changes.

If you’re in this group, you’re in a tough spot—there’s no way around it. It’s true that there’s no magic formula that will instantly give you a multi-million-dollar nest egg, but with an open mind, a different way of thinking, careful planning, disciplined budgeting, and a positive outlook, you can still have a decent retirement.

One option is to utilize your currently untapped assets to bridge the financial gap and increase monthly income, while still maintaining your current lifestyle and living the American retirement dream of: Financial Security, leaving an Inheritance and Living in My Own Home.

The primary objective is that you will always have your home to live in and that you will not outlive your money. The realization of these core objectives becomes so overwhelming to retirees that they start to compromise their perception of the American Dream and begin to consider alternatives. I call these alternatives to retirement “Plan B.”

The goal is securing your home for your retirement years.

The Solution

In my normal course of business, I have seen thousands of clients’ portfolios. I see their income, their savings, their home loans and home values. I talk with them about their goals and their dreams. As a Boomer myself, I can fully relate to their situations. When I talk to clients who are Boomers, at times I feel like I am talking to myself. I have been down the same road—I have the same dreams, and I have many of the same concerns for my own retirement plans.

As I analyze and think of all my Boomer clients between the ages of 55 and 65, I am so sorry to say that 50 percent of them come to me not knowing how they are going to retire on their current savings and are considering other Plan B options.

Several years ago, I set out to find a solution that would put my clients back on track with minimal risk and minimal life style change. As a mortgage banker and a real estate broker, I understand the financial pros and cons of mortgage lending as well as the pros and cons of real estate. I am aware of and understand all the various loan options offered by the banking industry. I tapped into my experience and resources in the industry to find a way to help my clients renew their Plan A vision for retirement.

When I found the answer to my question, the solution, I went into test mode. I had many meetings with my support team—my attorney, financial advisor, and accountant—to test my conclusions. After our analysis, they all concluded that for the right person, in the right situation, my solution is a sound strategy.

Fundamentally, my solution is very simple. Restructure current non-liquid assets into a liquid asset. We are not adding or investing; there’s no buying or selling. We are simply restructuring what you already have. And the best part is that the restructure has very little additional risk.

Two Words That May Change Your Life

If the next two words bring about any negative thoughts, please stick with me. Hear me out. There is a lot of misinformation out there, and I want you to have a clear understanding of this potentially life changing alternative.

“Reverse Mortgage.” These two words can drastically change your outlook for retirement. Forget what you’ve heard in that past. Trust me; the new updated reverse mortgages are not the old unfriendly reverse mortgages of past years.

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  1. Excellent article. Written in a practical easy to understand style. It is a great read for anyone looking for answers about how they will be able to afford to retire!

  2. Thank you for all the tips to access resources that enable us to retire.

  3. reverse mortgage is not for everyone. first you make sure you can afford to pay all property tax and home insurance.

  4. I am a baby boomer and trying to figure out how to retire. The bottom line Steve Gulino points out is that a reverse mortgage will add $2,000 a month in money I can spend and I can stay in my house until I die, never make a house payment and my kids get the equity in the house when I pass. This is fantastic!

  5. what a great synopsis and will share this with others!

  6. Call me a naysayer, or call me someone with a true life experience with reverse mortgages. My inlaws had a reverse mortgage. The husband died about 4 months into the mortgage The wife (my mother-in-law) continued to live in the home, payment free, for another 4 years. Then, dementia set in, and she moved in with us. We attempted to sell her home (located 200 miles away), but could not since the housing market had crashed. She was upside down on the reverse mortgage (and the bank refused a short sale from qualified buyers).

    My sister in law asked to move into the home and live there. Nope, not allowed.

    We then tried to rent out the house until the market corrected. Nope, also against reverse mortgage rules. With no other recourse, we notified the bank that Mom was walking away and that the bank should foreclose. Then began the 2 year ordeal of the bank “stalking” my wife and the other children demanding payment, or help selling the house. Although none of their names were on the mortgage. The stress on my wife was incredible. We asked not to be called. We talked to supervisors. Nothing seemed to work. Finally, after 2 years, they stopped calling.

    By the way, the bank still owns the house. It sits vacant and is decaying away, and has never been put on the market for sale. It has been 5 years since Mom moved out.

    So remember, reverse mortgages are good ONLY if you live there. When you move out, you must sell the home.

  7. So much not said in this article. We purchased our recent home in 2012. It was a foreclosure in a Florida retirement community. The previous owner’s husband had died and she took out a reverse mortgage. I felt terrible that we were buying a house that an 80 year old lost. After more research, I discovered the reason so many people lose their homes. Remember that it is said your home value will still increase. But in a down market, your value will decrease. Not only is there mortgage insurance to pay for, the interest on this mortgage loan starts to accrue immediately. Imagine having a mortgage loan and never paying the interest for 10-20 years. Now imagine all that interest and a lower value. If you wanted to sell the house you would not be able to cover the cost of the interest added on to the loan.No one should have a mortgage in retirement unless they have the savings to pay it off. If you can’t afford to stay in your home a reverse mortgage is not going to solve your problem. Because of your bad luck or poor planning, you will be in a better position to live in a rental, smaller home or with family. In other words, get your ducks in a row before you retire.

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