4. Tap your home equity. Homeowners have a built-in emergency fund if unexpected expenses occur in retirement. "If you own a home and there is equity in it, you can always have that to fall back on," says Nusbaum.
Retirees who are at least 62 years old with no mortgage or only a small mortgage left to pay off may be eligible for a reverse mortgage. This type of loan generally does not require repayment as long as you continue to live in that home, keep up the house and pay the property taxes. However, if you later wish to move, you must repay the lender the principal value of the loan, plus interest and fees. And only the equity remaining in the home after the loan is completely repaid will be passed on to your heirs.
5. Continue to work. Even a small amount of extra income could make you much more comfortable in retirement. "Even if you cannot continue at the job that you had, certainly look into part-time work to supplement your income for a few years," says Gianola. "The best solution is to try to get some sort of a paycheck for a few more years, because it will allow you to stash away some extra money."
You can work and claim Social Security benefits at the same time, but if you claim early and earn too much, some of your benefit will be temporarily withheld. Workers under their full retirement age, which is typically age 66 or 67, can earn up to $14,160 without penalty in 2011.
"If you are 62, you could get a part-time job making $10,000 or $12,000 a year and still get your Social Security checks," says Gianola. After that, 50 cents of each dollar you earn will be deducted from your Social Security payments. The year you reach your full retirement age, the earnings limit jumps to $37,680, and the penalty is decreased to 33 cents withheld from each dollar you earn above the limit. After you reach full retirement age, there is no reduction in your payments for working and receiving benefits at the same time.
6. Consider your children. Some older adults move in with their children or other relatives to cut costs for both parties. "Some children are buying homes that have a mother-in-law suite, and the parents are selling their homes and turning over the proceeds to the child," says Gianola. Approximately 49 million Americans lived in a household that contained at least two adult generations in 2008, up significantly from 28 million people living in multigenerational households in 1980, according to a Pew Research Center analysis of census data.
Curtis wonders if he will one day need help from his two children, who are currently ages 10 and 15. "I have no idea if they will ever be in a position to help me or their mother if we needed it," he says. "I'm not really a person who wants to need to be helped."
This article was reported by Emily Brandon for U.S. News & World Report.
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Come on, advice to retirees needs to account for the fact that most people are so hammered by now that they don't have two nickles to rub together.
Try getting a job when you are over 60. Go ahead, try.
Yeah, CHANGE. We got it. But not the kind we thought.
Re: Living on social security income when retired.
Stay away from reverse mortgages. You will find they are crooked and only benefit the lenders who lie to you with false information.
You will get burnt.
I started planning for our retirement when I married at 32.
My wife never worked but stayed home and raised our two children.
I started a small business and worked my **** off for 20 years. I borrowed to invest in real estate. I worked my **** off even more taking care of the real estate investments as well as my small business.
I paid my bills. We lived in an adequate home and drove an adequate auto. By the time we had been married 15 years we felt we could build and pay for a nicer home and we did. Five years later when my children graduated from High School, I sold my business and my real estate and retired.
I invested the proceeds in the stock market and my wife and I lived on part of the income. The rest, we reinvested. When my children finished college, we sold our nicer home, bought a much smaller home, and invested the rest.
When I reached 62, I chose to draw SS at the reduced rate. My wife did not reach qualification age until 11 years later when she began to draw. As of this date, we still have not drawn out an amount equal to the amount contributed by me and my corporation plus interest earned even including my wife's withdrawals.
During that period of time, my wife and I traveled all over the world. We did not stay in $300 a night hotels and did not fly Business class. When we did travel on a cruise ship, we utilized the discounts and specials. We traveled to areas of the world we wanted to see, not the areas that were visited by the Celebrities. We really enjoyed our lives. We were proud of the accomplishments of our children. We lived as we chose to live. We had nothing to prove to anyone. We have lived this life for nearly 30 years and we did it through our own efforts. The SS was helpful but not necessary and if to keep out great nation from having to default on it debt, I would give up that income in a second.
I realize that not all citizens are fortunate enough to have sufficient income to give up SS. I also think that there are many who could manage their income better. In stead of a new Lexus or BMW, could buy a lesser auto and instead of a 5,000 sq ft home, could live in a 2,000 sq ft home. Instead of paying $36,000 additional in principal and interest on a home and auto, they could pay more taxes or give up part of their SS. to help the country. Government employees could give up a part of the huge retirement benefits, so could union members. Certainly business could give up many of the tax breaks and subsidies.
Even the so called "Poor" could agree that they are not entitled to live better that some working people who not only have less income than them, but pay taxes on what they receive, unlike the "Poor" who get back income taxes which they have never paid.
It's time for the whole country to step forward. It's time for everybody who is a citizen of this country to realize how fortunate they are to have been able to live in a country that offers its citizens such wonderful opportunities. It's time to stop being so selfish and so self involved.
Like the poster of Uncle Sam said in 1940, "I need you". It's time for loyal citizens to answer that call!!!
The SS fiasco began under Carter, he is the one that signed the law for any age eligible immigrant to be able to draw SS. There is a little town on the US/ Mexico border that specializes in post office boxes! The town has a population of 5,000, but they have over 20,000 p.o. boxes. 20/20 did a story about the happenings in this town and talked to some of the p.o. box owners. The majority of the customers were from Mexico and once a month they would come to town and get their SS checks! That"s just one of the things that is wrong with SS, and it needs to be fixed! If the health care bill that Obama is pushing gets appoved we will have the same thing there, Nancy Polosi has already said that the health care bill would take care of all immigrants, whether they were legal or illegall. That is something Americans can't afford!
Each and every one of you that has paid into SS, has paid TWICE as much as you think.
The matching amount put in by your employer, was really put in by you, it just never showed up on your paycheck.
Your not getting back even close to what you paid.
This article claims that, "[social security] benefits would be adjusted each year for inflation".
That is clearly a misstatement, as current beneficiaries received no benefit increase for inflation in 2010 or 2011. The truth is, nobody knows what social security will become in the future.
Regarding home-equity loans as a tool to increase revenue, the first word that comes to mind is "foreclosure". Be very careful.
For me, the following statement is the most-important statement in the article.
"The people who seem to weather [retirement] the best are those individuals who go into it intentionally understanding that they have to live within their means."
Our 4 biggest banks have 8 trillion in assets and have been getting billions in 0% loans to play the market and make foreign investments. Wonder why they can't get by with less?
We routinely pay banks 600k for a 200k house even when the government guarantees the loan. If those loans were made directly for a low interest, notes would be cut in half or more and trillions would be with our people instead of thieving banks. Why do we run our country for banks and wall street instead of our people?
We need to completely redo our financial system. That means we first need a government.
Fortunately, in reality I retired early at 56 in 2006 on a small pension with health insurance and lived on a very tight budget for four years until it was clear I wasn't going to go through my nest egg before I start collecting Social Security, which will probably be at age 64. My company-75%-subsidized health insurance will become my supplemental, prescription, dental, and vision insurance when I reach 65 and sign up for Medicare A & B.
A number of my friends are just getting by in retirement but could live very well if they were getting 33%-50% more from Social Security. The disappearance of corporate pensions in America should be replaced with an option to contribute and extra 6% more to Social Security to provide a "piggyback pension." 401k's generally have high fees that gouge half the gains out of them (compared to about 10% of the gains in regular mutual funds) and people don't know how to handle them: a piggyback pension would be a better option for most.
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