Broken Nest-Egg, Scrambled Retirement Years.

 

By Jon Flynn

 

Many people save money over their working years with the goal of building a big enough “nest-egg” to last throughout retirement.  However the recent financial crisis has not only broken many nest-eggs, it’s turned many seniors retirement years into scrambled eggs.  The devastation of main-street Americans hard earned life savings has been nothing short of a nightmare.  What once seemed like “enough” savings for a many retirees, is now “not nearly enough”. 

 

While some investors have the luxury of waiting for their investments to come back, others need to face reality and consider making some changes now.  Here are a couple ideas that in combination or on their own may help right the ship.

 

Immediate Annuities.   Using a portion of your savings to purchase an Immediate Annuity can be a good idea.  I’m not the biggest fan of many of the types of annuities that insurance companies promote but I do find that this type of an annuity can work really well for older seniors.  Immediate Annuities are a contract with an insurance company.  In exchange for giving the insurance company a lump sum they promise to pay you a fixed amount of annual income for life or a for a specific term. The insurance company must meet this obligation even if you break the record for longest living person in history.  Because principal may not be returned when the term you agreed upon ends, payments can be higher than you’d get from investments that return only interest. 

 

Reverse Mortgages.  Reverse Mortgages are becoming quite popular in America.  Essentially a loan in reverse, they can be a terrific solution for many retirees. They can allow retirees over age 62 the ability to generate a substantial amount of tax-advantaged income by tapping into one of their largest assets – the equity in their home.   You can receive free information about Reverse Mortgages by calling AARP at: 800-209-8085.

 

Downsizing.  It’s not uncommon to feel attached to your home.  However, if you’re willing to move to a less expensive home, many benefits can be realized.  Perhaps the kids are gone now and a big home is no longer required.  With a smaller home you may spend less on things like utilities, taxes, and maintenance.   In addition, you might also gain some non-financial benefits as well.  Smaller homes can be easier to take care and to get around in.

 

Everybody’s situation is different and arriving at solutions can get complicated.  So always consult with financial, legal, and tax professionals before making any decisions.

 

 

Jon Flynn is a Certified Financial Planner ^TM and owner of Flynn Financial in Eynon. He is a Representative of Securities America, Inc., Member FINRA/SIPC and of Securities America Advisors, Inc. Flynn Financial and Securities America are unaffiliated.   Mr. Flynn can be reached at 570-876-5015.