Many people have worked hard for decades only to find they have not saved enough for retirement. U.S. data shows that nearly half of all retirees in 2023 do not have enough to retire on. When is the best time to retire in the U.S. and what are the options? A leading finance company has presented Digital Journal readers with some options.
In the circumstances of approaching retirement, there will be different options to consider when evaluating if there is sufficient money available. One option that presents itself is for those who own their own homes. According to the company Reverse Mortgages in California, the option of processing a ‘reverse mortgage’ provides an option for some homeowners. The firm outlines a strategy for those approaching retirement to consider.
Whereas with a traditional or ‘forward’ mortgage, a person borrows money to buy a home, reverse mortgages apply to people in later life who own their home and want to release some of the equity locked up in it.
Those who are eligible include those who have owned their property for decades. If approved, homeowners can receive their proceeds in one lump sum settlement or equal monthly disbursements. The loan need never be paid back unless the mortgage owner moves or dies.
Another factor in the U.S. to consider is social security. According to a new financial report by the Motely Fool, the age of 62 has become a popular age for people to claim their social security. This is the earliest age a newly retired person can sign up.
As to how much is an individual entitled to in monthly benefits at 62, this is dependent depends upon their personal history of wages. When a person reaches their full retirement age they become eligible to collect full benefits. However, this is not achieved until a person reaches the age of 67.
This means, if someone files for benefits at the age 62, they will technically be reducing their benefits by 25 percent to 30 percent.
A newly retired individual consider that it is worth reducing these payments so that they can receive their benefits sooner than later. However, according to the Motely Fool, unless they are sitting on a significant savings and retirement program, taking social security at 62 could be erroneous.
The Reverse Mortgages in California firm explains that, ideally, a person should enter retirement with a significant amount of money stored away in an IRA or a 401(k). Yet too many working people are not prepared to pay for retirement.
Transamerica recently conducted a survey and found that most workers possess a median of $67,000 saved up for their retirement years. This is insufficient to get most people through their first year of retirement, depending upon the monthly bills and debts.
To give the $67,000 amount some context, a retirement savings balance amounts to $2,680 of income per year. This is challenging for many people, according to Reverse Mortgages in California.
In the final analysis, Reverse Mortgages in California explain that it is important that persons nearing retirement be realistic about the numbers. Modelling for those who have around $67,000 to their name, then realistically speaking, they cannot afford to early retirement.
Instead of filing for early benefits at age 62, many people will need to push themselves harder. This means remaining in the workforce, growing their benefits, while building up their savings. By committing to this financial mind-set, it can mean the difference between struggling in retirement years and managing enough money to maintain a suitable standard.
Delaying you decision to retirement benefits means individuals can grow their benefits by up to 8 percent per year all the way to the age of 70. Reverse Mortgages in California states that this is an idea worth consideration.
